Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — MINISTRY PENSIONS

War Widows

Mr. Peter Thorneycroft: asked the Minister of Pensions why rent allowances, payable to widows of Service men who have lost their lives on war service, are withdrawn if these widows take in boarders.

The Parliamentary Secretary to the Ministry of Pensions (Mr. Simmons): The fact that a widow takes in boarders does not necessarily exclude her from receiving a rent allowance. Where, however, she has two or more boarders and thus obtains appreciable rent relief it is the practice to take into consideration their contributions.

Mr. Thorneycroft: Is not this rather silly in view of the housing shortage which is oppressing everybody at the present time? Surely it is in the interest of the Government to encourage people to take in the maximum number of boarders? Has the hon. Gentleman made any representations in that direction?

Mr. Simmons: We think that the present arrangement is not ungenerous. but we are looking at it again.

Brigadier Peto: Is it not preferable for widows who are really hard up to take in boarders than to have to go to the National Assistance Board?

Mr. Paton: How long has this practice continued? Can I have an answer?

Mr. Simmons: I should want notice of that question.

Brigadier Head: asked the Minister of Pensions to give further consideration to the request of the British Legion for an

increase of war widows' pensions, because a large number of elderly war widows are finding it impossible to exist on a pension of 35s. a week.

Mr. Simmons: The question of increasing the basic rates of these and other war pensions has recently been considered by the Government, and I would refer the hon. and gallant Member to the statement on the subject made by the Chancellor in his Budget speech.

Brigadier Head: Is the Minister aware that the statement of the Chancellor was very disappointing and that in the recent debate in the House there was widespread sympathy on both sides for these widows? Cannot the matter be re-examined, as real hardship is being incurred by these people?

Mr. Simmons: Not in the existing financial circumstances.

Captain Ryder: To what extent have these people benefited?

Mr. Simmons: There have been increases in the rental allowances for widows.

Mr. H. Hynd: asked the Minister of Pensions whether he is aware of the concern felt by the British Legion for a number of war widows who were married after their husbands suffered disablement and whose husbands subsequently died of their war disabilities, but who are not eligible for pension because death took place prior to 3rd September, 1939; and whether he will again look at the possibility of bringing such war widows under the Royal Warrant.

Mr. Simmons: The Government have recently gone very carefully into this matter, but they regret that they are unable to give further retrospective effect to the provision introduced in 1946.

Mr. Hynd: Can my hon. Friend advance some reason for this decision, because this is an obvious anomaly and there cannot be many people involved?

Mr. Simmons: There are considerable difficulties. This matter has recently been fully discussed by the Ministry's Central Advisory Committee and the difficulties explained to the Committee, which is representative of most of the ex-Service organisations in the country.

Sir Ian Fraser: Will the Minister make it clear that he is not calling in aid the Central Advisory Committee in his defence of this matter, because that would be a most awkward precedent in view of the secrecy of its proceedings?

Mr. Simmons: No, Sir. I simply stated that the matter had been discussed with them and the difficulties explained to them.

Mr. Heathcoat Amory: Cannot the hon. Gentleman tell the House what are these difficulties?

Mr. Simmons: Not by question and answer.

Disability Pensions

Mr. Wood: asked the Minister of Pensions what would be the additional cost to the Exchequer of granting to all other ranks the same rate of disability pension as is now paid to warrant officers, first class.

Mr. Simmons: Approximately £10½ million per annum.

Mr. Wood: Can the hon. Gentleman say whether or not the Government are in favour of the principle of granting equal compensation to people who have suffered similar disabilities?

Mr. Simmons: There is no proposal at the moment for equal compensation. The ex-Service men's organisations are themselves not unanimous on the question.

Special Allowances

Mr. Wood: asked the Minister of Pensions what proportion of disabled pensioners are at present receiving special allowances.

Mr. Simmons: About 41,000 disablement pensioners, or nearly 6 per cent., are receiving one or more of the four main supplementary allowances, namely, for unemployability, constant attendance, comforts and lowered standard of occupation. About 41,500 allowances for wear and tear of clothing are also in payment.

Mr. Wood: Would the hon. Gentleman not agree that life has become extremely hard for the other 94 per cent. Fortunately most of them are in employment, but they enjoy a very little increase of pension over pre-war pensions when the cost of living was much lower.

Mr. Simmons: The great majority of war pensioners are fortunately in employment and the pensions and allowances for their wives and children are tax-free additions to their wages. I think that it is a very good commentary on the general state of the nation that only 6 per cent. of ex-Service men need these allowances.

Motor Car Allowance (Increase)

Sir I. Fraser: asked the Minister of Pensions if he can now make a further statement on raising the motor car allowance for the disabled.

Mr. Simmons: My right hon. Friend has decided to increase to £52 10s. per annum the allowance towards maintenance and running expenses paid to those war pensioners to whom my Department has supplied motor cars. The increased allowance will take effect from 10th April, 1951, and application will not be necessary.

Sir I. Fraser: Thank you, Sir.

Oral Answers to Questions — FESTIVAL OF BRITAIN

Exhibition, Poplar

Mr. Arthur Lewis: asked the Lord Privy Seal if he is aware that the Exhibition, "Tomorrow," at Lansbury, Poplar, is not proving as successful as it ought to be owing to the lack of publicity and lack of special transport from the South Bank Exhibition by road, rail and river; and whether he will take the necessary action to popularise this Festival of Britain Exhibition.

The Lord Privy Seal (Mr. Stokes): It is true that this Exhibition is not proving as popular as was hoped. In all the official Press advertising undertaken by the Festival Office, the Exhibition has had equal prominence with other Festival attractions.
My right hon. Friend the Minister of Transport is satisfied that the transport facilities are adequate. The river bus service, which serves the South Bank Exhibition site and the Festival Pleasure Gardens, regularly calls at the West India Dock Pier, and a regular bus service runs past the pier to within a very short distance of the Exhibition.
I should welcome any help in popularising this extremely valuable Exhibition,


which, I agree, deserves much more public support.

Mr. Lewis: Can my right hon. Friend say whether or not this particular Exhibition is being advertised at the South Bank Exhibition and the Festival Gardens; and, secondly, can he say whether or not any of the Royal Family have, as yet, visited the Poplar Exhibition—if not, will he make suggestions to the appropriate quarters?

Mr. Stokes: I am not sure whether the second half of the question is in order, but I think that the answer is "No." With regard to the first part, I am afraid that I shall have to find out. I think it is quite certain that it is advertised; but I will look into it.

Mr. Gibson: Is my right hon. Friend satisfied that the direction notices to this Exhibition are really effective? It is a very fine Exhibition, but the complaint I get from people is that it is hard to find because there are not sufficient directional notices.

Mr. Stokes: I will look at that. I have been down there myself and I had no difficulty finding it.

Mr. Boyd-Carpenter: In view of the fact that the right hon. Gentleman has answered that part of this Question which relates to transport facilities, is it to be assumed in future that Questions to Ministers about transport will be answered provided that Members do not commit the error of putting them down to the Minister of Transport?

Mr. Stokes: I should not have thought so. I merely thought it appropriate to give the House as much information as possible.

Air Commodore Harvey: Will the right hon. Gentleman say how many have attended this Exhibition and, in relation to the second part of the supplementary question by the hon. Member for West Ham, North (Mr. A. Lewis), whether it is not a fact that the members of the Royal Family are grossly overworked?

Mr. Stokes: Obviously, I cannot pursue that.

Earl Winterton: Surely it has been long held in this House that no one may bring into debates or discussions, or introduce

by way of questions and answers, the position of the Royal Family? I would ask for a Ruling on this matter, Mr. Speaker.

Mr. Speaker: I agree with the right hon. Gentleman. The first question I regret, and the second one I regret all the more.

Mr. Lewis: May I say to the House that what I did was through lack of knowledge, and that if I have done anything wrong I withdraw and apologise for it.

Publicity

Mr. Janner: asked the Lord Privy Seal whether it is intended to increase the amount of publicity at present given to the South Bank Exhibition with a view to increasing the attendances during the remaining period for which it is to be open.

Mr. Stokes: No, Sir. The news value of the South Bank Exhibition has tended to over-shadow the merits and attractions of some of the other Festival Exhibitions, like the Exhibition of Science and Books at South Kensington and the Exhibition of Architecture at Lansbury, Poplar.

Mr. Janner: Is my right hon. Friend satisfied that sufficient publicity has been given generally to the Exhibition in the United States, in view of the fact that there has been a disappointing number of visitors from that part of the world?

Mr. Stokes: I think it has, but the others are not so successful, because there are not so many lights and attractions and people do not go to them quite so easily.

Advanced Bookings (Refund)

Mr. Deedes: asked the Lord Privy Seal if he will arrange with the South Bank Exhibition authorities that where advance block bookings are made on behalf of organised parties, and where such arrangements have to be cancelled unavoidably, money for the tickets may be refunded, providing the tickets are returned before the date on which they are valid.

Mr. Stokes: One of the conditions of sale printed on the South Bank Exhibition advance tickets is that no money will be refunded. This is normal practice. I think the rule must continue to apply to organised parties as well as to individual


purchasers. But every rule has its exceptions, and the Festival Office are prepared to consider applications for refunds in cases of special difficulty or hardship.

Welsh Flag

Mr. Llewellyn: asked the Lord Privy Seal why it has been decided not to fly the Welsh flag at the South Bank Exhibition; whether he is aware of the indignation caused by this decision; whether he has consulted the Welsh Festival Committee; and what action he proposes to take.

Mr. Stokes: Only the Union Jack and the Festival flag are flying on the flagstaffs at the South Bank Exhibition. There is, however, a display of flags outside the Lion and Unicorn Pavillion; this consists of the Union Jack and its flag components. I understand that as a gesture to the Welsh Choir, which was giving a performance in the Royal Festival Hall on 19th May, the Welsh flag was added to this display. Although I am advised that it is heraldically inappropriate, this step was so much appreciated that it has now been decided to include the Welsh flag permanently.

Sir Waldron Smithers: Has the right hon. Gentleman considered flying the Red flag in order to help the fellow travellers on the other side of the House to find their way to Morrison's Folly?

Mr. Stokes: I had not thought of that, but now that the hon. Gentleman has suggested it I will put it to the Festival authorities.

Brigadier Rayner: Would the right hon. Gentleman see that amid all the illuminations on the South Bank the Union Jack is in future illuminated and spotlighted at night?

Mr. Stokes: I thought that it was, but I will have another look at it.

Oral Answers to Questions — SCARCE MATERIALS (SUBSTITUTES)

Mr. Edelman: asked the Lord Privy Seal what steps he is taking to provide substitute materials and synthetic alternatives to materials of which there is a shortage.

Mr. Stokes: I would ask my hon. Friend to await the statement I shall make on the Second Reading of the Ministry of Materials Bill, in which I propose to deal with this subject.

Oral Answers to Questions — BRITISH ARMY

Malaya (Training)

Air Commodore Harvey: asked the Secretary of State for War if he can give an undertaking that soldiers arriving in Malaya from the United Kingdom shall receive not less than six weeks' training before commencing active operations in the jungle.

The Secretary of State for War (Mr. Strachey): It is the policy of the Commander-in-Chief, Far East Land Forces, that reinforcements should not be sent on operations before they have been in the Command four weeks for acclimatisation and for training in the tasks they are likely to perform in jungle operations. The Commander-in-Chief has been asked to investigate the desirability of increasing the length of training of reinforcements in Malaya. He has, however, advised against it.

Air Commodore Harvey: Does the Secretary of State recall that some 10 weeks ago the Under-Secretary of State informed the House that he would look into this matter? Does he not think he ought to have informed the House without a Question having to be put down to get further information?

Mr. Strachey: No, Sir. The matter has been looked into and, as I have just said, the Commander-in-Chief, Far East Land Forces, has been consulted in the matter.

Germany (Travel Vouchers)

Mr. Remnant: asked the Secretary of State for War why National Service men in British Army of the Rhine are not allowed the free travel vouchers for local leave which are granted to Regular soldiers, in addition to the two United Kingdom vouchers.

Mr. Strachey: Leave rules for Regular soldiers and National Service men in Germany are on a different basis. Regular soldiers who are entitled to a total of three free warrants a year may take local leave in addition to up to two home leaves a year. National Service men do not receive local leave in addition to home leave. Under current rules they may, however, take local leave together with free travel warrants within the four authorised for their whole-time


service if they are not entitled to home leave, or if they do not wish to come home.

Mr. Remnant: That is rather an involved statement which I find difficult to absorb. Could it be made clear to the National Service man that he is entitled to two home leaves and a free voucher, but not to one free leave voucher in addition?

Mr. Strachey: I will gladly try to make the position clear. We are not denying that there is an advantage to the Regular.

1st East Surrey Regiment (Embarkation Leave)

Mr. Vaughan-Morgan: asked the Secretary of State for War how many of the recent draft of the 1st Battalion East Surrey Regiment, who embarked for overseas service, had not had embarkation leave before their departure.

Mr. Strachey: None, Sir.

Mr. Vaughan-Morgan: Is the right hon. Gentleman aware that I can give him the name of at least one Service man who has not had any? Is he further aware that as a result of the intervention of my hon. Friend the Member for Wembley, South (Mr. Russell) and myself 17 men were removed from a draft at the very last moment, and are being flown out now, because they had no leave at all during their military service?

Mr. Strachey: I shall be glad if the hon. Gentleman will give me the name of the soldier who was denied embarkation leave, because I am advised there is no such case.

Mr. Vaughan-Morgan: Will the right hon. Gentleman make it a personal matter to look into these cases?

Mr. Strachey: indicated assent.

Mr. Llewellyn: Can the right hon. Gentleman say how many days of embarkation leave these troops have had and if all get exactly the same amount?

Mr. Strachey: No, Sir. This was a draft which was sent out as a matter of some urgency owing to the losses suffered by the Gloucestershire Regiment and some of them had shortened periods of embarkation leave. It varied in each case.

Mr. Llewellyn: Can the right hon. Gentlemen say was the minimum amount of leave these men had?

Canal Zone (Amenities)

Mr. Amory: asked the Secretary of State for War what steps he has in hand to improve the amenities for the troops of the Middle East Land Forces in the Canal Zone.

Mr. Strachey: Amenities in the Suez Canal Zone have been improved. Some further improvements are being carried out locally from public and non-public welfare funds. In the case of Middle East Land Forces, grants from such funds have amounted to some £18,000 in the last 12 months. Some £600,000 is being spent in the current year in providing additional married quarters and making improvements to single accommodation and communal establishments.

Mr. Amory: Will the right hon. Gentleman make sure that every possible speed is made particularly with the provision of better temporary married quarters, and will he ensure, in spite of the many pressing problems with which his Department is confronted at the present time, that the needs of the M.E.L.F. are not forgotten?

Mr. Strachey: I quite agree with the hon. Gentleman. This is one of the most difficult problems which face us, but the figures show that active steps are being taken.

Mr. Remnant: Is the right hon. Gentleman aware that at the end of the war there was a very considerable semiofficial welfare fund called "The Canal Area Welfare Fund"? Is it still in existence?

Intelligence Personnel, Korea

Brigadier Rayner: asked the Secretary of State for War how many Army intelligence personnel are employed on service in Korea.

Mr. Strachey: Thirty-eight.

Class Z Reserve

Sir W. Smithers: asked the Secretary of State for War why it has been found necessary for 21046748 Frank Leonard Clark, who lives at Cudham, Kent, to go to Dover, some 65 miles away, for his


medical examination on 14th June, and then to proceed, on 11th August, to New-quay, some 290 miles away, for his 14 days' Z Reserve training; to what extent this is general practice; and, in view of the deteriorating economic situation, if he will make more economical arrangements in the interests of the taxpayer.

Mr. Strachey: Wherever other factors have allowed, Class Z reservists have been posted to Territorial Army units near their homes in the hope that some will undertake voluntary engagements with these units. Mr. Clark is posted to the Inns of Court Regiment, which is the nearest Territorial Army unit of his Corps. He must therefore train with that unit, although its place of training for this year is Newquay. With regard to his medical examination, I am informed by my right hon. Friend the Minister of Labour and National Service, who asked me to thank the hon. Member for drawing his attention to this case, that the instruction to Mr. Clark to report to Dover for medical examination was issued in error; he will be examined at Lewisham which, I am told, meets his convenience.

Sir W. Smithers: Is the right hon. Gentleman aware that the taxpayers of Britain are fed up with this groundnut mentality?

Mr. E. L. Mallalieu: The hon. Gentleman has mentioned "the deteriorating economic situation."

Sir W. Smithers: Hear, hear.

Mr. Mallalieu: Can my right hon. Friend give any indication of the depths to which the country would have sunk economically if the hon. Member for Orpington (Sir W. Smithers) and his Friends—if any—

Mr. Speaker: That is not a question asking for information.

Mr. Chetwynd: asked the Secretary of State for War how many men over 40 years of age are being called as Z reservists this year; and what is the percentage of the total.

Mr. Strachey: Approximately 4,000, or about 2 per cent. of the total, being recalled.

Mr. Nabarro: In consideration of the fact that 1,250,000 National Service men

have been trained since 1945, why is it necessary to call up any man over the age of 40?

Mr. Strachey: Because this is a specialised call-up. For example, in the case of Anti-Aircraft Command certain individuals of that age—they are only 2 per cent. of the total—are extremely valuable because they are experienced in the technical functions for which they are needed.

Mr. Alport: asked the Secretary of State for War whether his Department has any intention of compensating Class Z reservists called-up for 15 days' training, who are self-employed, for the financial loss which this further call for National Service will involve.

Mr. Strachey: No. Sir. Self-employed men may apply for exemption from recall on grounds of exceptional financial hardship, but if the appeal is not allowed no compensation can be authorised.

Mr. Odey: asked the Secretary of State for War whether steps can be taken to see that Z reservists recalled for 15 days' training are engaged on military training suited to their qualifications and experience and not engaged throughout as mess waiters, as in the case of A.694827 Gunner J. B. Lindsay.

Mr. Strachey: War Office instructions provide that no distinction should be made between Z reservists and others in the allocation of essential administrative duties. These are, however, kept to an absolute minimum except where the individual's normal employment is as cook, driver, clerk, etc. The maximum use is to be made of civilians as mess, cookhouse and sanitary orderlies and a special increment of civilians is authorised to assist units in carrying out these instructions.

Mr. Odey: Will the Secretary of State bear in mind that these Z reservists have been called to the Colours often at grave loss to individuals and serious dislocation to industry? Will he not have regard to the desirability, to say the least of it, of these men being so employed that their readiness for battle is improved and their time not wasted as mess waiters?

Mr. Strachey: I cannot agree that there is waste of time in Z reservist camps. From my personal experience I think that the administrative duties have been kept to a very low limit indeed.

Mr. George Thomas: In view of the fact that my right hon. Friend told the House earlier this afternoon that this call-up is a specialised one, is he seeking to tell us that the 15 days is spent in mess waiting?

Hon. Members: Answer.

Mr. Strachey: I will give my hon. Friend, if he likes, details of what happened in this case. The man was called up as a driver, three drivers were allotted to this unit, and only two vehicles were available. [Laughter.] That man, who was from this walk of life in civilian life, was so employed in the mess and I cannot regard that case as a scandal.

Lieut.-Commander Gurney Braithwaite: Is waiting in the mess an administrative duty?

Mr. Ian Harvey: Is the Secretary of State aware that that is a complete contradiction of what he told the House in a recent debate when he said that the object of this call-up was to create teams? Will he say what sort of team a mess waiter is in?

Mr. Strachey: I have told the House exactly how this arose, and I see nothing, to be ashamed of.

Foreign Legion

Mr. Amory: asked the Secretary of State for War whether he has now given further consideration to the possible advantages of forming something in the nature of a foreign legion as part of the regular British Forces.

Mr. Strachey: This matter has been most carefully considered, but the position remains as stated in the reply given by my right hon. Friend the Minister of Defence to the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on 19th September, 1950.

Mr. Amory: Is the right hon. Gentleman aware that there are many men who fought with us during the war who, for

one reason or another, find it difficult or impossible to join their own national forces and would be ready to give loyal and useful service as members of the armed Forces of this country?

Mr. Strachey: We debated this matter on a recent Private Member's Day. There is a great deal to be said on both sides. I cannot enter into a debate on the subject now.

Professor Savory: Would it not be possible to use some of the 90,000 Polish veterans, the finest soldiers in this world?

Hon. Members: Oh.

Mr. Strachey: The Royal Ulster Rifles might take exception to the hon. Gentleman's statement.

Colonel Clarke: Will the right hon. Gentleman consider what the Royal Air Force has done in this direction with the Assyrian levies in Iraq? Is there not some possibility that similar troops may be raised now?

Mr. Strachey: I should not like to exclude the possibility of raising further forces from Colonies and dependent areas. In fact, I think I have indicated that there are real possibilities in that.

Local Overseas Allowance (Korea)

Miss Burton: asked the Secretary of State for War (1) if he will publish in the OFFICIAL REPORT a copy of the Treasury questionnaire on the cost of living used to determine whether or not a local overseas allowance should be granted to His Majesty's forces overseas:
(2) what are the specific items of expenditure on which decisions concerning the granting of local overseas allowances are based.

Mr. Strachey: I will, with permission, answer Questions Nos. 20 and 29 together.

Miss Burton: On a point of order. May I ask for information, Mr. Speaker? An hon. Member may have two Questions down and not agree that they are the same type of Question. Am I in order in asking whether I may protest against the suggestion of the Minister that both should be answered together?

Mr. Speaker: Yes, the hon. Member is in order. She may get the same answer to each Question, but I cannot help that.

Miss Burton: Even so, may I have them taken separately, Mr. Speaker?

Mr. Strachey: Perhaps my hon. Friend would care to hear the answer first? The answer is: I presume that my hon. Friend has in mind the questionnaire issued by the Service Departments. It is a very long document, but I am arranging for two copies to be placed in the Library of the House. The assessment of local overseas allowances takes into account expenditure on toilet requisites, haircutting, postage, newspapers, stationery, drinks, cigarettes, transport, recreational activities, civilian clothing, laundry and shoe repairs, outside meals, holidays and, in the case of personnel accompanied by their families, expenditure on food and household maintenance.

Miss Burton: My right hon. Friend has been good enough to give me a copy of this questionnaire. Might I ask him if, in addition to the facts he has already stated, it does not include practically every conceivable phase of living, except that obtaining in Korea, under items such as cinemas, restaurant prices, club membership and so on? Would my right hon. Friend not agree that there should be either a different form of questionnaire or a different form of overseas allowances for men serving in places like Korea, where conditions have never been harder?

Mr. Strachey: The local overseas allowance, as my hon. Friend has suggested, is given in respect of the higher cost of living over this very wide field. It is true that in Korea there is very little a soldier can spend his money on, except at the N.A.A.F.I. A comparison of N.A.A.F.I. prices in Korea has been given in the House on several occasions in the past, and I do not think that N.A.A.F.I. prices in Korea, taking one item with another, compare badly with the prices in this country.

Brigadier Head: Is the Secretary of State aware that what it boils down to, so far as the troops in Korea are concerned, is that they find themselves paying higher N.A.A.F.I. prices because there is not a super-cinema in Korea which will justify a higher allowance?

Mr. Strachey: I cannot agree that they are paying higher N.A.A.F.I. prices. I should have thought that the prices

already given to the House, taking into account important factors like cigarettes. are not higher.

Brigadier Clarke: Is it not a fact that last week-end the Secretary of State for War was advocating on Labour platforms a higher Socialist society? Will he instead look after the conditions of British troops?

Mr. Strachey: I do not think that the two occupations are incompatible in any way.

Brigadier Clarke: Then make them compatible.

Mr. A. R. W. Low: Was it the Treasury questionnaire which the Commander-in-Chief in Korea was asked to answer when he specially wrote to the Minister about a further overseas allowance in Korea, or was it a special questionnaire sent by the Secretary of State for War himself?

Mr. Strachey: No, Sir. He had this questionnaire in front of him, and we asked him to give his opinion on the matter. He did so in a telegram.

Mr. A. Lewis: Is my right hon. Friend aware that I sent him some weeks back a whole list of N.A.A.F.I. prices which were far in excess of those being charged here? Will he look at it and let me have a reply?

Mr. Strachey: I did give a reply to my hon. Friend in the House. It is in the OFFICIAL REPORT, a list of comparative N.A.A.F.I. prices. Although some are higher, some are considerably lower.

Brigadier Clarke: asked the Secretary of State for War what representations there have been from officers commanding units in Korea to higher authority for the issue of overseas allowances to men fighting in Korea.

Mr. Strachey: So far as I am aware, no such representations have been made.

Brigadier Clarke: Is the Minister aware that I have received many representations from junior officers who are finding it extremely difficult to live? Will he please see that this is implemented?

Mr. Strachey: Perhaps the hon. and gallant Gentleman will let me have any representations that he has received.

Miss Burton: asked the Secretary of State for War what are the specific items of expenditure on which decisions concerning the granting of local overseas allowances are based.

Mr. Strachey: I have already given my hon. Friend a full list of these items in answer to Question No. 20. It is a long list, and it will appear in the Library. She will see that practically all the items of personal expenditure are taken into account.

Miss Burton: I persisted in asking for a separate answer so that I might have your permission, Mr. Speaker, to ask a further supplementary question. Does the Secretary of State for War realise that in the N.A.A.F.I. lists which were published in HANSARD on 27th February at column 1912 there were 19 articles and that for those 19 articles the man in Korea paid 1s. 7d. less; in other words ld. less for each article. Presumably that was why he was not qualified for a local overseas allowance. In making a comparison between the hardships experienced by men stationed in Hong Kong and men stationed in Korea, will he adopt some other basis for determining allowances for the men stationed in Korea?

Mr. Strachey: That raises the question of another form of allowance—a campaign allowance, campaign pay, danger money, or something of that sort—and that is another question. It raises a very important issue of principle, and there are grave objections to that course.

Mr. Walter Fletcher: Would not the right hon. Gentleman get a much better view of this matter if he were to send a few copies of the questionnaire out to Korea to be filled up by the troops, whose clarity of expression is well-known?

Earl Winterton: Does not the whole difficulty in this matter arise from the persistent refusal of the Government to recognise the fact that we are fighting a war in Korea and, in consequence, our men are treated there worse than in any other war?

Mr. Strachey: It is precisely because the tradition of the British Army is against special campaign pay, though there have been instances of it, and against special rewards for being on

active service, that the question of principle I mentioned just now arises.

Territorial Officers (Travel Vouchers)

Mr. Bossom: asked the Secretary of State for War why Territorial Officers recalled for their fortnight's training receive railway warrants for third-class travel only, when serving officers are expected to travel first-class.

Mr. Strachey: Territorial officers proceeding to camp are normally entitled to first-class travel. If the hon. Member will let me have details of the case he has in mind, I will look into it.

Mr. Bossom: I have here a letter from one who was sent a third-class voucher. What more does the right hon. Gentleman want?

Small Arms

Mr. Low: asked the Secretary of State for War what other semi-automatic or automatic rifles, whether in prototype or in production, were considered for use by the British Army when the 280 rifle was decided upon; of what bore they are; and how these rifles compare in weight, ease of production and efficiency with the 280 rifle.

Mr. Strachey: The War Department is fully aware of all small arms production and development being carried out by North Atlantic Treaty Nations. Before reaching the decision to adopt a rifle of the new calibre for the British Army, all this information was taken into account. I cannot give details of developments and research in other countries, but I am satisfied that the rifle and ammunition which we are now adopting are in every way the best available.

Mr. Low: Does not the ri9lit hon. Gentleman think that there would he a certain advantage from the point of view of both Army morale and the interests of the country in giving a little more information about these matters?

Mr. Strachey: I think that at the appropriate time it is quite possible to give a little more information, but I understood from the right hon. Gentleman the Leader of the Opposition that we were to debate the matter in the House.

Mr. George Wigg: Will my right hon. Friend make available a specimen of the new rifle so that hon. Members may examine it?

Brigadier Peto: Is not one of the objects of the North Atlantic Treaty to make our weapons and equipment similar to those of our Allies in the Commonwealth and elsewhere? Why has this great step been taken in the opposite direction?

Mr. Strachey: There is no doubt that standardisation is most valuable and desirable, but it should not be all one way. We consider that we are producing a rifle which will perhaps be generally admitted to be the best that has ever been produced. Why should not other people standardise on our rifle?

Mr. Speaker: The supplementary question did not arise out of the main Question. The Question merely asked what semi-automatic or automatic rifles were considered. General considerations are not in order.

Gloucestershire Regiment (Recognition)

Brigadier Clarke: asked the Secretary of State for War if, in view of the gallantry shown by the Gloucestershire Regiment in Korea, he will consider some special recognition of their services there.

Mr. Strachey: Yes, Sir.

Brigadier Clarke: Does not the Minister realise that every camp-follower in Korea will get the normal United Nations medal? Does he not think that our gallant troops there deserve some special recognition?

Mr. Strachey: The hon. and gallant Gentleman's Question referred to the Gloucestershire Regiment. In that respect we are considering special recognition.

Mr. Vane: When the right hon. Gentleman considers any special recognition, will he remember that the Royal Northumberland Fusiliers, together with the Gloucesters, held forward positions in the Brigade area on the day the Gloucesters suffered so many casualties and that, although they were luckier than the Gloucesters, the Royal Northumberland Fusiliers shared the heat and burden of the day?

Mr. Strachey: I appreciate the hon. Member's statement. At first sight everyone was anxious to give special recognition to the Gloucestershire Regiment. There are, of course, other formations that have performed with the utmost gallantry in Korea, and a balance has to be kept.

Lieut.-Commander Braithwaite: How soon will the right hon. Gentleman be able to announce the form that this recognition will take?

Mr. Strachey: We have had a recommendation from the Honours and Awards Committee. The matter has to go before His Majesty before anything can be done. I trust that we shall not have any undue delay.

Brigadier Clarke: In view of the importance of that statement, does not the right hon. Gentleman think that he could have uttered it earlier?

Officers' Uniform (Purchase Tax)

Brigadier Clarke: asked the Secretary of State for War why officers fighting in Korea are called upon to pay Purchase Tax for battle dress.

Mr. Strachey: It is normal for officers to pay Purchase Tax on battle dress. The outfit allowances which officers receive and the tax free element in their pay for the upkeep of uniform cover Purchase Tax on all items of uniform in the authorised scales, including battle dress.

Brigadier Clarke: Surely the Minister does not suggest that an officer who may be crawling through barbed wire in Korea can be classed in the same category in this matter as an officer who is in this country? Does he not agree that officers who are on active service should get their uniforms free of Purchase Tax?

Mr. Strachey: If there was a case, I think it would have to be made out for an increased allowance, but it can be considered.

Brigadier Thorp: Is not battle dress a utility garment? Surely Purchase Tax should not have to be paid on it?

Mr. Strachey: I should want notice of that question. I think it is a matter for my right hon. and learned Friend the President of the Board of Trade.

Brigadier Clarke: Is it not the duty of the Minister to think out these things for himself?

Mr. Chetwynd: Surely Purchase Tax is not paid on exported articles? Are not these battle dresses exported?

Mr. Strachey: I should require notice of that question.

Footpath, Colinton

Lord John Hope: asked the Secretary of State for War whether he is aware that the footpath leading from Dreghorn Loan, Colinton, to the Pentlands has been closed to the public; and whether he will make a statement.

Mr. Strachey: This footpath passes over War Department land and is not a public right of way, but for some years the War Department have allowed the public to use it. Recently persons using the footpath have trespassed on the adjoining land, looted and damaged War Department property and interrupted firing on the ranges. It has therefore been closed to the public. The War Department are taking up with the local authority and the Public Rights of Way Association the possibility of reopening the footpath with appropriate safeguards.

Discharge by Purchase

Mr. Boyd-Carpenter: asked the Secretary of State for War whether he proposes to amend Clause 8 of the form of attestation used in the case of voluntary enlistment so as to make clear that the right of discharge by purchase within three months of attestation is in abeyance.

Mr. Strachey: No, Sir. This ban is only a temporary measure. The recruiting staff are, however, being instructed to ensure that the attention of volunteers is drawn to the fact that discharge by purchase is at present in abeyance.

Mr. Boyd-Carpenter: In view of the last part of that answer, does the right hon. Gentleman agree that in the absence of any such explanation the conditions on the form are somewhat misleading? Will he reconsider any individual cases in which the warning was not given and in which there is some chance that the man was misled?

Mr. Strachey: If the hon. Gentleman has an individual case in mind. I will consider it.

Colonel Gomme-Duncan: Will the right hon. Gentleman consider simplifying the whole of the attestation form, which, to my certain knowledge over the last 40 years, is very involved and is difficult for a young recruit to understand?

Brigadier Prior-Palmer: Does not the right hon. Gentleman realise the danger of giving this information orally? Would it not be better to give the man a printed slip bearing the warning so that it could be proved that the man had been warned?

Mr. Strachey: That is certainly worth considering.

British Rhine Army (Civilians)

Mr. Duncan Sandys: asked the Secretary of State for War what action His Majesty's Government has taken to clarify the position of German civilians performing transport and other duties with British Divisions in Germany, with a view to ensuring that they will be available for active service in the event of hostilities in that theatre.

Mr. Strachey: German civilians employed by the British Army in Germany have the right, as civilians, to withdraw their services after giving the appropriate period of notice. Measures to deal with the situation which would arise in the event of hostilities in Western Europe have been prepared, but it would not be in the public interest for me to give details.

Mr. Sandys: Can the right hon. Gentleman say definitely whether it is the policy of His Majesty's Government to try to secure the continued services of these German civilians in the event of hostilities; if so, whether the measures to which he refers have been drawn up in agreement with the German Government whose co-operation would obviously be necessary?

Mr. Strachey: I should not like to go into this complicated and somewhat delicate question in answer to Questions, but certainly there is no suggestion of dismissing these men on the outbreak of hostilities.

Mr. Sandys: Does not the right hon. Gentleman realise that, until this matter is clarified, the state of readiness of our divisions in Germany remains in doubt?

Mr. Strachey: I discussed this matter on a recent visit to Germany with the headquarters authorities of British Rhine Army, and I was satisfied with the preparations they were making.

Brigadier Smyth: Would not the right hon. Gentleman agree that it must be very unsatisfactory for these Divisions, which are supposed to be in a high state of readiness, to be utterly dependent on German civilians? Could he not look into this question very urgently?

Mr. Strachey: The question has been looked into and very careful work is being done at the headquarters of British Rhine Army on it. But there are grave objections to, for example, the replacement of all this civilian labour by British Army labour. That would be a retrograde movement in the proportion between teeth and tail. Therefore, it is not a simple matter.

Brigadier Clarke: Will the Minister say how long it would take to put these plans into operation, because time is most important in Germany?

Mr. Strachey: I cannot be drawn into that.

Brigadier Clarke: The right hon. Gentleman ought to know.

Space-Heating Equipment, Korea

Lieut-Commander R. H. Thompson: asked the Secretary of State for War whether he will authorise the issue of space-heating units to British Forces in Korea before next winter.

Mr. J. Langford-Holt: asked the Secretary of State for War what steps he is taking to prevent a repetition of the serious shortage of space-heating equipment for British troops in Korea in the event of another winter campaign.

Commander Maitland: asked the Secretary of State for War what arrangements he has made to provide space-heaters for men fighting in Korea during the winter months.

Mr. Strachey: The most suitable space-heater for use in Korea has proved to be

the Yukon stove, an American product. We have now arranged with the United States authorities that they will provide a sufficient number of these stoves for all British troops in Korea in time for next winter.

Mr. Langford-Holt: Can the right hon. Gentleman say whether he has applied this to the whole of the British Army, because this problem will occur wherever British soldiers are called upon to fight in snow-bound conditions?

Mr. Strachey: That is a much wider question.

Mr. Langford-Holt: It is an important one.

Mr. Strachey: It is an important question, but I cannot answer it without notice. I can say that we have discussed in the War Office this question of space-heating because, undoubtedly, experience in the Korean War has shown its importance.

Major Legge-Bourke: May I ask the right hon. Gentleman if, in view of the fact that presumably these space-heating units require the expenditure of dollars, he has made any attempt to get them manufactured in England?

Mr. Strachey: Of course we have considered that.

Casualties, Korea (Dependant Allowances)

Mr. Alport: asked the Secretary of State for War what payments are now being made to wives of officers and other ranks who have been reported missing during operations in Korea.

Mr. Strachey: Provided that marriage allowance was in issue at the date of the casualty, the wives of officers reported missing receive marriage allowance plus two-sevenths of the officer's pay; the wives of other ranks continue to receive the marriage allowance and allotments in issue at the date of the casualty. The period during which these payments may continue is limited at present to 52 weeks from the date on which the relatives are notified of the casualty.

Mr. Alport: Is the right hon. Gentleman aware that the payment of only two-sevenths of the pay in addition to the


marriage allowance is causing considerable hardship amongst a number of the wives of officers who are missing, who have still to bear the expense of educating children, for which probably their husbands made special allowance out of their pay? Will the right hon. Gentleman reconsider this scale of allowances in order to prevent that hardship in the future?

Mr. Strachey: I see that there may be difficulties in Korea in view of the long periods in which the officer or man is missing and we do not know whether he has been killed or is a prisoner of war. If the hon. Member will give me examples, I should he glad to look into them.

Soldiers' Widows (Housing)

Mr. Ian Harvey: asked the Secretary of State for War what housing provision he makes for the wives of soldiers who are occupying married quarters if their husbands die or are killed on active service.

Mr. Strachey: The provision of housing for the widows of deceased soldiers is the responsibility of the local authorities. Such widows are, however, permitted to remain in married quarters for a reasonable period while they are endeavouring to secure civilian accommodation.

Mr. Harvey: Is the Minister aware that the fact that these people are in Army accommodation precludes them from getting on to local housing lists and that they have no claims whatever to go on those lists, with the result that the chances of their getting housing are, therefore, nil?

Mr. Strachey: No, that is not the position. It is true that it would be quite possible, but unreasonable, immediately to evict these widows, but that is never done. Long periods of notice are given, and no final eviction action is taken before the cases come personally to me.

Major Legge-Bourke: Without in any way interfering with the affairs of local authorities, will the Minister see whether the War Office could not inform the local authorities that certain married families are requiring civil accommodation, in order to try to encourage the local authorities provide it?

Mr. Strachey: We keep in close touch with the local authorities.

Mr. Bossom: If it is the responsibility of local authorities to provide this accommodation, are they permitted to build additional houses for that purpose, or are they limited to the number which has already been settled?

Canteen Prices, Korea

Mr. G. Thomas: asked the Secretary of State for War what reduction has taken place in the cost of commodities in the Navy, Army and Air Force Institutes canteens in Korea during the past two weeks.

Mr. Strachey: The cost prices for a large number of commodities have been steadily rising during the past two or three months and continue to do so. It has therefore been impossible to reduce prices. But the Board of Management have decided to defer any increases for the time being.

Mr. Thomas: In view of the fact that my right hon. Friend finds it impossible to alter the overseas rate, could he not make some offer of subsidy for this department in order that prices shall be lower?

Mr. A. Lewis: Is my right hon. Friend aware of the fact that N.A.A.F.I. have just published their annual accounts showing huge profits, and would he not suggest that they give some of those huge profits back in the way of subsidies?

Mr. Strachey: It is not suggested that N.A.A.F.I. profits go to private shareholders or anything of that sort. As my hon. Friend knows, they are all used for Army purposes and amenities.

Maryhill Barracks (Court-Martial)

Mr. Emrys Hughes: asked the Secretary of State for War whether the sentences of the courts-martial in the case of the soldiers who recently escaped from Maryhill Barracks have yet been confirmed.

Mr. Strachey: Yes, Sir.

Mr. Hughes: Would my right hon. Friend give due consideration to the representations by the officer for the defence that mutiny was rather a harsh charge for these young men? Will the


soldier who was sentenced to three years be taken back to the Army after his sentence is completed?

Mr. Strachey: All the factors were taken into consideration, of course.

Oral Answers to Questions — KOREA (WAR MEDALS)

Brigadier Rayner: asked the Prime Minister whether he will now reconsider with Commonwealth Governments the issue of a British Commonwealth war medal for Korea.

The Secretary of State for the Home Department (Mr. Ede): I have been asked to reply. My right hon. Friend the Prime Minister would refer the hon. and gallant Member to the reply given on his behalf by my right hon. Friend the Minister of Defence on 2nd May to the hon. Member for Colchester (Mr. Alport).

Brigadier Rayner: That answer, however, was very unsatisfactory. In view of the fact that our troops in Korea are fighting, first and foremost, for their own country and for the Commonwealth in a full-scale war, which has lasted now almost exactly a year, and in view of the fact that a good many awards have been made for individual gallantry, is there any reason why a campaign medal should not now be given?

Mr. Ede: I understand that a United Nations Service Medal is being struck and that the ribbon is in course of manufacture.

Brigadier Rayner: Our troops do not want a United Nations medal. They want a medal given by their own country.

Colonel Ropner: While the gallantry of our troops deserves recognition, will the right hon. Gentleman remember that too great a number of medals detracts from the value of those that are awarded?

Oral Answers to Questions — DIRECTION OF LABOUR (MINISTER'S SPEECH)

Mr. Boyd-Carpenter: asked the Prime Minister whether the recent speech at Preston by the Minister of Supply on

the subject of the reimposition of direction of labour represents the policy of His Majesty's Government.

Mr. Ede: I have been asked to reply. My right hon. Friend the Minister of Supply at an informal Press Conference at Preston stated that the Government was most anxious to avoid direction of labour which was not necessary at the moment; and that there was no intention at present of introducing it. This was in accordance with Government policy about direction of labour which was fully explained in the debate on Defence and on the Supplies and Services (Defence Purposes) Bill in February.

Mr. Boyd-Carpenter: Does it follow from what the Home Secretary has said that the report in "The Times," in which his right hon. Friend is stated to have said that the direction of labour "may" have to return, is not an accurate reproduction of what his right hon. Friend said?

Mr. Ede: I prefer to base my answer on what I have just said. The position of the Government was fully explained in the two debates to which I have alluded. There is no intention of reintroducing direction of labour at present.

Mr. Godfrey Nicholson: What is the difference between a formal and an informal Press conference? Is an informal conference one at which the Minister does not have to think of what he is going to say? Surely, it is obvious in both cases that he will be quoted?

Mr. Ede: I understand the difference is that at a formal Press conference there is a hand-out which is put round among the persons present and then questions are based on it. In this case, there was no hand-out and my right hon. Friend was subjected to questions by the Pressmen, who had no paper on which to base whatever they asked.

Mr. Nicholson: Is not that just an ordinary simple interview? What is the difference? Why is a Minister to be excused for indiscretions more at an informal Press conference than at one which is formal?

Mr. Ede: There was no indiscretion in this case.

Oral Answers to Questions — COINAGE (1½d. PIECE)

Lieut.-Colonel Lipton: asked the Chancellor of the Exchequer what practical difficulties prevent the issue of a 1½d. piece.

The Chancellor of the Exchequer (Mr. Gaitskell): Mainly the additional burden imposed on the Mint, which is already working at full capacity, and the inconvenience of having to change ticket machines.

Lieut.-Colonel Lipton: If the difficulties are insuperable, will my right hon. Friend consider as an alternative the revaluation of the 1d. on the basis of 10 to the Is., thus at one stroke introducing a decimal coinage and at the same time making price increases unnecessary for bus fares, newspapers, beer and other items of daily expenditure?

Mr. Gaitskell: That is a quite different question, which I think is under consideration as a result of a report to my right hon. Friend the President of the Board of Trade.

Sir Herbert Williams: Is it not the case that because of the inflationary policies which the Chancellor is now pursuing the thing would be out of date as soon as it was made?

Mr. Churchill: Would it not be a matter of very great convenience to have a common copper coin which took the place of the old ld., even though we have to pay much more for it, and which we should at any rate want available for an enormous number of basic transactions—a myriad of basic transactions—which are of great common useage amongst the masses of the people? Surely that ought to be considered. The ld. now really does not cover anything that we are confronted with under the present dispensation.

Mr. Gaitskell: I am not quite sure whether I follow the right hon. Gentleman's thought in this matter, but as I have said, the question of a decimal coinage and of a change in the measurement system has been brought up in a recent report to my right hon. Friend the President of the Board of Trade and is under consideration.

Mr. Churchill: I was not speaking at all about decimal coinage—that is another

question altogether. The idea is that a coin should be made which takes the place of the penny, which, since the end of the war, has ceased to play its normal, natural and, I believe, necessary part in the ordinary life and transactions of the great mass of the people.

Mr. Gaitskell: There is, of course, no evidence to that effect. The Id. is used—[Interruption.] The right hon. Gentleman will, I am sure, distinguish the question of changes in the value of money from the question of what coins are or are not suitable for general circulation.

Mr. Churchill: Surely the coins in common usage ought to bear an effective relation to the value of money?

Mr. Speaker: We are getting a little wide of the original Question which, after all, asked what practicable difficulties prevented the issue of a l½d. piece, not whether it is desirable or not to have one.

Mr. Eric Fletcher: With all respect, may I put this to the Chancellor of the Exchequer—is my right hon. Friend aware that newsvendors and others are becoming increasingly reluctant to give a ½d. change if one gives them 2d. for a newspaper?

Mr. Arthur Colegate: Would the Chancellor of the Exchequer explain why making a central hole in a threepenny bit would throw a heavy burden on those in charge? It is a common form of coin on the Continent and would fulfill the purpose we all have in mind.

Mr. Gaitskell: Certainly it would mean additional machinery in the Mint and, during the interim period, it would increase the total output.

Lieut.-Colonel Lipton: Can my right hon. Friend give a definite assurance that, although the proposal for some change has received unexpected support from the Leader of the Opposition, it will, nevertheless, receive favourable consideration when it comes before my right hon. Friend?

Mr. Gaitskell: I do not think the question of what coins are or are not suitable is a major party political issue.

Mr. Nicholson: Will the right hon. Gentleman pay attention to the inscription, which is important? Is it not true that so long as the Labour Government are in power the less this coin will buy?

Sir T. Moore: On a point of order, I have two Questions, Nos. 48 and 49, on the Order Paper, which I do not want answered now, because I realise that Question Time has elapsed; but I should like your assurance, Mr. Speaker, that the answers will be published in the OFFICIAL REPORT. The question of publication of the figures for net income receipts was raised by Sir Frank Sanderson in 1948. The Minister then said he would not publish them in the OFFICIAL REPORT, but you finally decided that it should be published because of its great importance in this country and the United States.

Mr. Speaker: Of course, the answers will be published in HANSARD. That always takes place.

Sir T. Moore: No, Sir.

Oral Answers to Questions — SCARCE MATERIALS (ALLOCATION)

Mr. R. S. Hudson: (by Private Notice) asked the Prime Minister whether he can make a statement showing what are the inter-Departmental arrangements regarding the distribution of materials referred to in paragraph 17 of Cmd. 8278 in view of the many changes that have taken place since the date mentioned in the White Paper.

The Secretary of State for the Home Department (Mr. Ede): I have been asked to reply.
An inter-Departmental Committee. under Ministerial chairmanship, meets regularly to consider the supply and demand of the more important scarce materials and to settle how the available supplies should be allocated between the various sponsoring Departments and the main groups of industrial consumers. These decisions are made effective—by the Departments concerned—as regards supplies to individuals firms by licensing or other means. The materials dealt with vary from time to time, but at present the main materials covered are sheet steel, tinplate, softwood, sulphur and sulphuric acid.

PERSIA (ANGLO-IRANIAN OIL COMPANY)

Mr. Eden: (by Private Notice) asked the Secretary of State for Foreign Affairs whether he will make a further statement on the situation in Persia.

The Secretary of State for Foreign Affairs (Mr. Herbert Morrison): In my statement to the House on 14th June, I mentioned the demands which had been presented by the Persian Oil Board in Abadan to the Company's General Manager.
The first meeting between the AngloIranian Oil Company delegation and the Persian representatives to the discussions took place in Teheran on the evening of 14th June, and at an early stage the Persian Minister of Finance, who headed the Persian delegation, made three specific demands:

(1) That the Company's Board in London and its management in Persia should henceforth deal with all matters affecting Persia and falling within the province of the provisional Persian Board of Directors only in conjunction with the latter.
(2) That the proceeds of the Company's operations arising from Persian oil, less expenses, as from 20th March (as provided in the Nationalisation Law) should be handed over to the Persian Government who would deposit 25 per cent. with some mutually agreed bank against any claim for compensation that the Company might prefer.
(3) That the Company should render a statement of all sales transactions from that date onwards.

It was made clear that acceptance of these demands was a condition precedent to the opening of discussions.
The Company's delegation at once replied that they would have to refer this new development to London. The Persians originally gave them until Sunday, 17th June, in which to reply, but this was later extended to today, 19th June. Advice from London has now been sent to the delegation, which is to meet the Persian representatives again this evening.
The House will not expect me to say what answer the delegation will give at this evening's meeting in Teheran. I will take an early opportunity to make a further statement to the House on this important matter.
Meanwhile, I should perhaps mention the statements attributed by the Press to Mr. Makki, one of the members of the Persian Oil Board now in Abadan, to


the effect that, if the Company's answer to the three demands is not satisfactory, the installations will be taken over tomorrow, 20th June. I do not know to what extent, if at all, this ultimatum—if Mr. Makki has been correctly reported—represents the attitude of his Government. I should hope it does not. The Company and His Majesty's Government have from the start been ready, and are still ready, to discuss the whole matter reasonably and fully; we believe that a solution satisfactory to all concerned can be found. But ultimata and prior conditions of this kind make reasonable negotiation impossible.

Mr. Eden: Will the right hon. Gentleman accept that the closing passage of his reply certainly has the endorsement of hon. Members on this side of the House? May I ask him to bear in mind in these discussions that both Abadan and Haifa, the two largest British-owned refineries in the world, are not operating at full capacity and, while rightly refusing an ultimatum in respect of Persia, will he consider whether the time has come for steps to be taken to ensure that our tankers can go to Haifa, so that this country and allied countries can have the refined products to which we are entitled under international law?

Mr. Morrison: I do not disagree with what the right hon. Gentleman has said and I can assure him that every opportunity will be taken to bring persuasion or pressure to bear on the Egyptian Government to solve the problem of the transport of tankers for use at Haifa.

Mr. Eden: I accept that. Will the right hon. Gentleman also bear in mind that persuasion has been going on about the Canal for something like two years and in that respect we are absolutely within our international rights, and, if the Egyptian Government are not willing to accord us those rights, there are measures that lie in our power to take with our Allies to ensure the observation of our rights?

Mr. Morrison: I can assure the right hon. Gentleman that I am willing to consider any suggestions he has to make as to that.

Mr. Somerset de Chair: Is it not becoming increasingly clear that the conditions are not present in Persia which will afford

a solution of this problem, a stable and durable settlement? As the right hon. Gentleman said, in answer to a Question on 29th May:
All these matters have been the subject of consideration, and appropriate steps have been taken."—[OFFICIAL REPORT, 29th May, 1951; Vol. 488, c. 43.]
—in answer to the question whether he would take necessary steps to defend the lives of British subjects there and protect the installations—are we to understand that His Majesty's Government will if necessary, take steps to protect the installations from seizure by the Persian Government?

Mr. Morrison: I have answered that more than once. I have said we must take proper steps and all the steps we can to protect British lives. The other point does raise wider considerations, and I have not given specific answers about it, and do not think I should.

Mr. Eden: The right hon. Gentleman quite properly asked me for a suggestion. May I ask him to consider the suggestion whether, if our international rights are still not met after these two years, it would not be worthy of consideration to send one of our tankers to the Suez Canal under, if possible, allied, but at any rate effective, escort?

Mr. Morrison: I think it would be best if that Question were put on the Order Paper and I would consider it.

Mr. de Chair: Further to the reply, did the right hon. Gentleman say, in the memorandum on 4th June, that:
His Majesty's Government have every right to intervene in defence of this great British interest in Persia."—[OFFICIAL REPORT, 4th June, 1951; Vol. 488. c. 693.]
and leave the House on that occasion with the impression that His Majesty's Government would not give up these oilfields and the installations in the present circumstances?

Mr. Morrison: I have nothing to add to the answer I have given. I have looked it up and I think it is reasonably clear.

Mr. Duncan Sandys: The right hon. Gentleman has asked my right hon. Friend for suggestions. Is he aware that the impression given by his two answers is that he and the Foreign Office and the Government have given all too little consideration to this matter?

Hon. Members: Nonsense.

Mr. Morrison: That is a rather partisan and irresponsible observation. I will say that not only am I willing to accept positive and concrete suggestions from the deputy-Leader of the Opposition, but I should be willing also to consider suggestions from the right hon. Member for Streatham (Mr. Sandys).

CHAIRMAN OF WAYS AND MEANS (MOTION)

Mr. Churchill: May I ask the Leader of the House whether he has come to any conclusion about the Motion standing on the Order Paper in my name and the names of my right hon. Friends on this bench on the question of a Ruling by the Chairman of Ways and Means?

[That this House views with concern the decision of the Chairman of Ways and Means so to exercise his powers of selection as to exclude Amendments to Clause 1 of the Finance Bill, which would have permitted the House to debate and pronounce upon specific burdens imposed upon individuals and industries.]

I gave the right hon Gentleman some notice of this Question. Has he reached any conclusion as to what course the Government should take?

Mr. Ede: It is quite clear that a Motion of that kind cannot remain on the Order Paper undebated. If the Motion remains on the Order Paper, it will be the duty of the Government to find time for its discussion at the earliest possible date. In normal circumstances I should have expected the debate to have taken place before now, but owing to the timetable of the Finance Bill and the necessity of getting it into law by 5th August, it has not been possible to make a suggestion up to the present. I can assure the right hon. Gentleman that I have the need for an early debate on this Motion, if it remains on the Order Paper, very much in my mind.

Mr. Churchill: May I ask the right hon. Gentleman—I have to adhere to the interrogative form—whether he is aware that the statement he has made will, I think, give general satisfaction, because undoubtedly it represents the proper and

correct conduct of the House in these difficult and delicate matters. I am very glad indeed—perhaps I ought to say, am I not very glad indeed—to hear that the right hon. Gentleman will have this matter cleared, in one way or the other, from the Order Paper. I cannot refer to it without saying that there is nothing personal about the Chairman of the Committee; it is a constitutional issue which is involved, and which we think ought to be cleared out of the way. The longer it remains in its present indeterminate position, the more danger there is of people in the country reading these words and using them perhaps with an undue freedom. Therefore, it seems desirable that the matter should be settled, and I am glad to have the assurance of the right hon. Gentleman.
The only other question I wish to ask him is whether it might be worth while for the Committee of Privileges dealing with the case which was remitted to them yesterday by the House to wait and see what is the view of the House of Commons upon the issue contained in this Motion.

Mr. Ede: I am very glad if anything I can do makes the right hon. Gentleman glad, because I have had some doubts about his attitude on that matter in the past. May I say that I think that the Motion on the Order Paper is a matter for the House itself and we cannot expect the business of the House to proceed as it should while a Motion that implies censure on one of the occupants of the Chair remains on the Order Paper.

Mr. Churchill: That is absolutely right.

Mr. Ede: The right hon. Gentleman's patronage is sometimes very embarrassing. May I say that it is apt to be misunderstood in certain quarters of the House? This is a distinct House of Commons domestic issue—

Mr. Churchill: Yes.

Mr. Ede: The question that was raised yesterday with regard to a breach of Privilege is not in the same category. I could not answer today as Chairman of the Committee of Privileges as to what attitude they will adopt when they come to consider the matter—

Earl Winterton: I should hope not.

Mr. Ede: I seem to give such satisfaction to the Opposition Front Bench that I sometimes wonder why they give me so much trouble at later hours of the day. Undoubtedly the Committee of Privileges will have to consider the matter remitted to them in the light of all these circumstances and I cannot today—and I am quite sure my fellow Members would resent it if I did—give any answer for them.

Mr. Churchill: I should like to thank the right hon. Gentleman for the admirable manner in which he has dealt with this issue, and I earnestly hope that any suggestion of patronage will not get him into trouble in his own family.

EXPORTS TO CHINA

The President of the Board of Trade (Sir Hartley Shawcross): With the permission of the House, I should like to make a further statement on our trade with China. Hon. Members will recall that, in the course of the debate in Committee of Supply on 10th May, I said that we were keeping under review the whole question of exports to China, taking into account the proposals which were then under consideration by the Additional Measures Committee of the United Nations.
The Resolution passed by the United Nations on 18th May recommended that every State should apply an embargo on shipments to areas under the control of the Central People's Government of the People's Republic of China and of the North Korean authorities, of arms, ammunition and implements of war, atomic energy materials, petroleum, transportation material of strategic value, and items useful in the production of arms, ammunition and implements of war. The Resolution further required each State to determine which commodities exported from its territories fall within the embargo, and to co-operate with other States in the application of the embargo.
As a result of the review to which I have referred, the Government have now decided to impose export licence control on all goods to be sent from the United Kingdom to China and Hong Kong, and an Order has been published to-day giving effect to that decision. The effect

of the Order, which will come into operation on 25th June, is that we shall be in a position to keep a close watch on all exports to China and, in the case of exports to Hong Kong, to satisfy ourselves where this seems necessary, by inquiring from the Hong Kong authorities whether or not the goods in question are required for use in Hong Kong or whether the intention of the importer is to re-export them to China.
As I stated previously, it is not our intention to impose a total embargo on trade with China, and export licences for goods which are not considered to be of military or strategic importance to China will be granted freely, subject to avail-abilities and the prior claims on our resources. On the other hand, licences will not be granted for export to China of goods which in present circumstances could be of strategic and military importance. Licences to export these goods to Hong Kong will only be issued when the Hong Kong authorities have given an assurance by the issue of import licences or otherwise that the goods will not find their way to China.
I am arranging for the list of goods for which no export licences will be granted for export to China to be included in the OFFICIAL REPORT. The goods on this list will also be embargoed for China by all British Dependent Territories, including Hong Kong. In addition, we have recommended to the Governor of Hong Kong that he should consider subjecting all these goods to import licence control. This should ensure that other countries can export such goods to Hong Kong in the confident knowledge that the goods are required for use in the Colony or for export to permisible destinations.
I should like to make it clear that the prohibited list does not involve a major intensification of the measures which we in the United Kingdom have progressively adopted since the Korean hostilities began. We are satisfied that the measures which we have been operating have been effective in preventing any supplies of substantial military or strategic importance reaching China from the United Kingdom, but we decided that it was desirable to introduce statutory controls to replace certain informal arrangements with industries on which we have hitherto relied to prevent the


export to China of many types of goods of strategic importance in connection with her military operations in Korea.
Our representative in the United Nations has already reported to the Additional Measures Committee that the United Kingdom and Dependent Territories will embargo to China and North Korea any exports of goods on the list to which I have referred. I think that it will be generally agreed that the measures we are taking represent a comprehensive interpretation of the intentions of the United Nations Resolution.

Mr. R. S. Hudson: While welcoming the right hon. and learned Gentleman's statement, may I ask whether we can take it that it will not interfere with legitimate re-export trade between Hong Kong and China upon which the very existence of Hong Kong depends?

Sir H. Shawcross: I am obliged to the right hon. Gentleman for his question. As we have pointed out on previous occasions, the economic existence of Hong Kong does depend on its maintaining trade with other countries. We hope that the arrangements which we have now established will permit that trade to go on whilst assuring that there will be no re-exports to China of goods which may have any military or strategic significance.

Mr. Gammans: Is it not a fact that only one-third of the external trade of Hong Kong is now with China? May I also ask the right hon. and learned Gentleman whether he will tell the House what is the present position with regard to rubber? Is it not a fact that both from this country and from British Dependent Territories we have prohibited the export of abnormal quantities of rubber to China? To what extent has that example been followed by Ceylon, Indo-China and Siam and other countries which produce rubber?

Sir H. Shawcross: It is the fact that Hong Kong maintains substantial trading relations with countries other than China,_ although her trade with China is of considerable importance in view of the imports of essential commodities, particularly food, which she obtains from China. As for rubber, the position is that a total embargo has been placed on the export

of rubber from the United Kingdom or from British Colonies to China. I should want notice of the question about arrangements made by other countries in regard to their exports of rubber direct to China, but many other countries have, I believe, adopted a similar position.

Mr. Eden: Do we understand that the United Nations have some organisation which is co-ordinating this action? Is the right hon. and learned Gentleman in touch with them and does he know what the other countries are doing to take parallel action—for instance, the Portuguese at Macao, and other countries which have just as direct a trade with China as Hong Kong?

Sir H. Shawcross: Yes; we are, of course, in very close touch with the United Nations Additional Measures Committee on which the United Kingdom is represented. Rubber happens not to have been one of the commodities included in the list established by that Committee.

Mr. Eden: I did not mention rubber.

Sir H. Shawcross: I am obliged. We are in touch with them in regard to the general embargoes, and all States which are members of the United Nations were placed under an obligation to provide information to the Additional Measures Committee, I think by about this time, as to what steps they were going to take.

Mr. Churchill: May we take it that the purport and character of the right hon. and learned Gentleman's statement today is to clarify a system which is at work in Hong Kong in such a manner as to make a more strict and effective control of all things which may have directly or indirectly a military or strategic value going from Hong Kong into China with whom the United Nations are conducting hostilities at the present time?

Sir H. Shawcross: Yes, Sir. That is the object of my statement; and the object of the policy which we have adopted, and which is embodied in the Order published today, is to ensure that the control will be tightened up so that Hong Kong will not be used as a place to which goods and commodities of strategic value can be imported with a view to their re-export to China.

Mr. Maclay: On the question asked by my right hon. Friend the Member for


Warwick and Leamington (Mr. Eden), could the President of the Board of Trade state whether the detailed list of military and strategic materials which will be circulated in the OFFICIAL REPORT is agreed with any other nations involved, or is it the British Government's interpretation of the recommendations of the Additional Measures Committee?

Sir H. Shawcross: It has not been agreed in that sense with any other country concerned. It has been the subject of consultations, but it is finally our interpretation of the requirements of the Additional Measures Committee, although in fact it includes various items which were not included in the list published by that Committee, of which rubber is a notable example.

Mr. Grimond: The President of the Board of Trade has indicated that the Additional Measures Committee has made what amounts to certain recommendations. Can he say how far those recommendations have been put into effect by other countries? Is he satisfied that, apart from Hong Kong, there is not a considerable export of potential war materials into China from other places?

Sir H. Shawcross: I am not in a position to say because the time has not quite elapsed for other countries to make their reports to the United Nations' Additional Measures Committee, nor has there yet been an opportunity for that Committee to examine the reports and find out how far other countries are complying with their Resolution, but I think I can say that I have no reason to doubt that, generally speaking, other countries, Members of the United Nations, are being loyal to the recommendations of the Additional Measures Committee.

Major Legge-Bourke: The right hon. and learned Gentleman said that it was not proposed to issue any export licences for any materials which might possibly be of strategic value. In view of the fact that we have over the past years been exporting a considerable tonnage of tinplate, would he say whether tinplate has now been placed on the prohibited list? If not, why not?

Sir H. Shawcross: Perhaps the hon. and gallant Gentleman would be wise to await the publication of the list in the OFFICIAL REPORT. Some tinplate for

packing foodstuffs may be going. As the hon. and gallant Gentleman knows—I think I gave the figures in an answer the other day—we have obtained a considerable supply of liquid eggs from China.

Mr. Paton: Can my right hon. and learned Friend say whether the Portuguese authorities have done anything at all to try to control imports to the Port of Macao?

Sir H. Shawcross: I am afraid I cannot answer for the steps taken by the Portuguese authorities. All I can say is that we have exercised a certain control over exports from Hong Kong to Macao to ensure that those are of a volume not significantly exceeding what is likely to be consumed in Macao itself.

Mr. Roland Robinson: Has the right hon. and learned Gentleman considered imposing similar restrictions on imports either into Singapore or Indonesia?

Sir H. Shawcross: No, Sir. We do not intend to do that so far as Singapore is concerned, although Singapore will in turn impose corresponding restrictions on her exports to China or Hong Kong.

Following is the list:

ITEMS SUBJECT TO EMBARGO FOR CHINA

1. Arms, ammunition and implements of war, including aircraft and engines.

2. Atomic energy materials and equipment.

3. Petroleum products. Crude petroleum, and refined petroleum products. Naphtha, mineral spirits and solvents.

4. Transportation Materials:

(a) Internal combustion engines.
(b) All motor vehicles (including tractors and motor cycles); trailers; and components and spares.
(c) Rails, locomotives and rolling-stock, and parts thereof.
(d) Ships and floating docks; including important parts.
(e) Cables suitable for harbour defence or minesweeping.
(f) Minesweeping equipment.
(g) Road and aerodrome construction machinery.
(h) Cranes.
(i) Nylon rope and parachute cloth.
(j) Containers suitable for use in storing or transporting petroleum of capacity of 4 gallons or more.

5. Metals, Minerals and their Manufactures:

(a) All classes of iron and steel products (including alloy steels) up to and including


the finished stage and including barbed wire and steel wire strand and cable, iron and steel scrap.
(b) Metals, the following and alloys wholly or mainly thereof including ferro-alloys and scrap.

Aluminium
Magnesium


Antimony
Molybdenum


Beryllium
Nickel


Bismuth
Sodium


Cadmium
Strontium


Calcium
Tantalum


Cobalt
Titanium


Columbium
Tungsten


Copper
Vanadium


Lead
Zinc


Germanium
Zirconium

(c) Items in the following fields:—

(i) Items used for the production of alloy steels.
(ii) Low melting-point alloys.
(iii) Metals (and their compounds) used in connection with petroleum warfare and military pyrotechnics.
(iv) Special abrasives for lens-grinding.
(v) Compounds constituting potential sources of metals listed under 5 (b) above.

(d) Asbestos and asbestos yarn, textiles and clothing.

(e) Strategic grades of mica.

6. Rubber and Rubber Products:

(a) Natural rubber (including latex and scrap).
(b) Synthetic rubber.
(c) Oil and fire-resisting rubber hosing and high pressure hosing.
(d) Tyres and tubes, other than those for pedal cycles.

7. Chemicals: Chemicals of importance in the production of:—

(a) Chemical warfare preparations.
(b) Military pyrotechnics.
(c) Fuels for self-propelling missiles.
(d) Additives for mineral oils.
(e) Strategically important plastics.
(f) Explosives and stabilisers, detonators, initiators and plasticizers for explosives.
(g) Anti-freeze and de-icing preparations.
(h) Fluids for use in hydraulically operated mechanisms.
(i) Materials having application in atomic energy.
(j) Special steels.
(k) Tyres and other rubber and synthetic rubber products.
(l) Refrigerants for use in tanks and submarines.
(m) Smoke screens and incendiary preparations.

8. Chemicals for use in the exploitation of mineral deposits and ores.

9. Catalysts for use in the manufacture of nitric acid.

10. Chemical and Petroleum Equipment and Plant:

(a) For the production of poisonous gases.
(b) For the production of chemicals for explosives, propellants, etc.

(c) Equipment capable of being used for bacteriological warfare purposes.
(d) Petroleum refinery equipment.
(e) Oil well drilling and exploration equipment.

11. Electronic (Including Radio and Radar) Equipment:

(a) Radar and other radio-location equipment.
(b) Electronic devices designed or specially suitable for use in warfare.
(c) Communication equipment including cables.
(d) Valves and other components specially suitable for use in the above and machinery for making these valves and components.
(e) Tissues for use in electrical apparatus.
(f) Other materials having important applications in electronics.

12. Precision and Scientific Instruments:

(a) Laboratory instruments of importance in research in such strategic fields as atomic energy.
(b) Precision and scientific instruments capable of being used in the development, production and testing of military equipment.
(c) Telescopes, binoculars and special optical glass.

13. Other Machinery and Accessories of the following types:

(a) Metal-working machine tools.
(b) Specialised types of rubber machinery, and specialised machinery for making tyre fabric.
(c) Diamond tools and industrial diamonds.
(d) Ball and roller bearings.
(e) Electric generators and motors.
(f) Compressors for wind tunnels.
(g) Steel mill equipment.
(h) Non-ferrous metal concentrating, refining, alloying, rolling and casting equipment.
(i) Portable hand held power tools.
(j) Welding machines and equipment (including electrodes).
(k) Measuring and testing instruments and machines for use in engineering workshops.
(l) Important abrasives.

QUESTIONS TO MINISTERS

Earl Winterton: Mr. Speaker, you were good enough to say on Wednesday of last week, when I raised two points of order, that you would give consideration to the matter and give an answer in due course. I beg to ask if you will now do so.
The first of my points related to the matter of a Question answered by a Minister after Question Time, and I wished to know with whom the initiative rests, whether the Minister should apply to you for permission to answer the Question on the ground that it was of great importance, or whether the hon. Member who put the Question down had a


right to do so. I might have added—and perhaps you will also give a Ruling on that as well—the question whether the statement that the answer is given with the leave of the House is a mere formality, or whether it has the same effect as when an hon. Member begs to ask leave to withdraw a Motion and some hon. Members shout "No," and he cannot withdraw it. Has the House really got the right to refuse leave?
The second question related to the matter of Mrs. Felton. You will remember that the hon. Member for Farnham (Mr. Nicholson) and myself raised this matter, and we asked you whether or not the fact that the Minister had mentioned that Mrs. Felton had apparently committed some offence in not giving evidence after she had been asked, or had promised to do so before a Select Committee, constituted a breach of the rule that there should be no disclosure of the proceedings of a Select Committee.

Mr. Speaker: The noble Lord the Member for Horsham (Earl Winterton) gave me notice that he was going to ask these questions, and I have considered them since he raised the matter. The first was as to who has the right to answer Questions out of turn. The initiative comes entirely from the Minister, but he does not have to ask the permission of the House. If he says "With the permission of the House," he is really saying something which is not necessary, and, even if one said "No," he would be entitled to answer the Question if, in his judgment, and he is given my permission, the Question is urgent and of sufficient importance. Of course, it is quite impossible for me to send to the Minister and say "What is the nature of your answer?" and, therefore, I have to take his word for it. All the objection I have is very often to say, "Well, there are several statements down today, and I think this one really might not be answered today."
With regard to the particular Question to which the noble Lord referred, I think there was a misunderstanding. It was down for the day before, and the War Office Questions were then down on the Order Paper before the Prime Minister's Questions. As events turned out, there

was a somewhat unusual number of Scottish Questions on that day, and so it would not have been reached in any case. The Minister did take the precaution ask me if I would give my permission for that Question to be answered. Having given it for one day when the Question was not asked, I felt that I could not refuse it on the next day; although it appeared last, it was a Question which was properly transferred according to order. I think that covers the first part of the question.
The next question was whether anything was disclosed from the Select Committee improperly. I have considered the Minister's statement in the House, and the only reference in it to any event in the Committee is that Mrs. Felton failed to appear. Erskine May, on page 434, says:
The proceedings and report of a Select Committee may not be referred to in debate before they have been laid upon the Table.
On page 608, Erskine May says:
By the custom of Parliament no act done at any Committee of either House should be divulged before the same be reported to the House.
I cannot see that the non-attendance of a witness is either a proceeding or an act of a Committee. It would seem natural for the Permanent Head of a Department to report to his Minister that a witness who had been summoned through him did not, in fact, attend. In this case, he had already, before the Committee met, been informed by Mrs. Felton that she could not be present.

Mr. C. S. Taylor: On that latter point, is it not a fact that the proceedings of this Committee have been reported in the House, but that the proceedings have not, in fact, been published?

Mr. Speaker: I do not think so; I do not know. Of course, I would not like to say anything about the proceedings, because I do not know what the Committee may or may not decide to do, and therefore I should like to be rather guarded in what I have to say.

Earl Winterton: I am very much obliged to you, Sir, for making the matter clear to me and, I hope, to the House.

Mr. Speaker: I am much obliged to the noble Lord.

FINANCE BILL

Considered in Committee. [Progress, 18th June.]

[Major Milner in the Chair]

New Clause.—(Reduction of duty FOR HORSE RACING.)

In subsection (3) of section one of the Finance Act, 1935 (which provides for reduced rates of entertainments duty in the case of certain entertainments) for the words "other than the racing or trial of speed of animals," there shall, with effect from the fifth day of August, nineteen hundred and fifty-one, be substituted the words "including the racing or trial of speed of horses but not of other animals."—[Captain Stanley.]

Motion made, and Question proposed.—[18th June]—"That the Clause be read a Second time."

Question again proposed.

4.6 p.m.

Captain Soames: I was very glad to hear from the Financial Secretary to the Treasury yesterday that the whole matter of the anomalies existing over different rates of taxation on entrance to various forms of sport was to be examined during the coming year, and there are one or two points which I should like to put to him in the hope that he will bear them in mind when that examination takes place.
First, there is the question of the position regarding the accounts of racecourses, which was raised by my hon. and gallant Friend who moved this Motion. The position is that there are in England and Scotland 71 racecourses, which make an aggregate net profit of £91,000, which is just over £1,200 per racecourse. The extra 2d. on entrance fees imposed by this Budget will make a difference of £98,000.
The racecourses have two alternatives before them. Either they can pass the incidence of that duty on to the person who attends, or they can carry it themselves. They have decided that for two reasons it is impossible to put the extra burden of 2d. upon the people who attend racecourses. The first is because attendances are already diminishing. They were 10,000 in 1948, 9,000 in 1949 and 8,000 in 1950 per day of racing—and I am speaking in round figures. Secondly, they

felt that, if the extra 2d. were put on, it would make a great difference to the attendances, and the law of diminishing returns would come into operation. Therefore, they have to carry this burden themselves.
They made a profit of £91,000, and this extra 2d. means £98,000 to those 71 racecourses. If we take them as average, although some make more profit than others, they will be making a loss of £7,000 on the figures as they are. Obviously, they could not continue, and they would have to find that money somehow. The only direction in which they can look, if it is not to the attendance, is to the stake money, the added money which they give for prizes, and any reduction there is bound to affect the number of horses that can be kept in training.
If we take away from the prize money, we are bound to have fewer horses in training, which means that fewer horses will be bred, and that will affect the export trade, which last year totalled £5 million and is a most useful asset in present circumstances. That is the position of the racecourses as they stand at the moment, in view of the addition of 2d. which is put upon them by this Bill.
When this matter was discussed in regard to speedway racing, the Financial Secretary said that he would look into the arithmetic. He said that it sounded very nice, but that if he looked into the arithmetic of this question, he would find that it does not work out that way. I have looked into the arithmetic where horse racing is concerned, and I find that the Entertainments Duty paid to the Exchequer last year on the old high rate, without the 2d., amounted to £1,600,000. If the higher rate were to be reduced to the lower or "live" rate, that figure would be somewhere between £400,000 and £600,000. In other words, there is a discrepancy of about £1 million.
I agree with the Financial Secretary that if we look into the arithmetic of it, the point cannot be made that the Government would, in fact, get as much money by increased attendances if we cut down from the higher to the lower rate. There is no question that there is a discrepancy of about £1 million and that the attendance would have to be multiplied by four in order to make up that discrepancy.
But the story does not end there. It must be pointed out that there is a difference between horse racing and


speedway. Speedway is an end product, so to speak. I do not think that any speedway fan would say that speedway does anything to encourage the export of motor cycles or the manufacture and sale of motor cycles in this country. Horse racing, on the other hand, is nothing more or less than the shop window of the bloodstock industry. If we hit horse racing so hard that there will be fewer horses bred in this country, which for many generations has been known as the stud farm of the world, it will, of course, affect the sale of horses. Of course, on the professional sales, such as those at Newmarket, as opposed to the amateur sales, the Exchequer does not lose either.
It must be borne in mind that it is not only the racecourse executives who are being affected by this higher rate of tax. The bloodstock industry as a whole will suffer unless something is done to ensure that the breeding of racehorses can be kept going. The racecourses are not asking for vast profits, but they want racing to be kept going in order that the bloodstock industry may continue, so that we may still remain the stud farm of the world, and so that the thousands who enjoy racing may continue to do so.

Brigadier Rayner: My hon. and gallant Friend the Member for Bedford (Captain Soames) reminded the Committee that the Financial Secretary stated last night that his right hon. Friend was going to look into the question of the Entertainments Duty between now and the Report stage, but that he did not think that any special case had been made for racecourses. My hon. and gallant Friend the Member for North Fylde (Captain Stanley), who moved this new Clause, and various of my right hon. and hon. Friends who have supported it, have, I suggest to the hon. Gentleman, made out a very definite case.
Very briefly, I will go over the points again. The first was that horsebreeding, which is a quality industry and a quality export business, depends directly on prosperous racing. I am a breeder of horses myself in a very small way, and I know that to be perfectly true. During the throes of the greatest war in history, the then Government kept horse racing going for that reason alone, and in spite of the fact that our taxation today is higher even than it was then, a matter of shame, the same considerations still apply. That is a very strong point.
The second point is that horse racing is becoming less and less prosperous, for, not only are costs going up but attendances are going down. Thirdly, the Treasury classification is perfectly absurd. If ever a sport was a live one, horse racing is. The jockeys are alive, the horses are alive, and the bookies are alive and even after the most disastrous day the punters are at least alive.
4.15 p.m.
Those on this side of the Committee who have so far spoken in this Debate are what one might call the "big guns" of the horse-racing world, or perhaps rather the blood stallions, or whatever one likes to call them. There is my hon. Friend the Member for Epsom (Mr. McCorquodale), my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken), and it is now up to me who, like my hon. and gallant Friend the Member for Bedford, represents a small racecourse, to say a few words.
I represent a bunch of small racecourses in Devonshire. I will refer to one in particular called Haldon—one of the most beautiful in the country—which has held race meetings since the reign of Charles II. I think it is almost as old as Newmarket. It now stages a meeting twice a year for the Devon and Exeter steeplechases. We have a voluntary committee, and we do not even pay the secretary. Indeed, in order to make ends meet, we have during the past few years been providing things out of our own pockets. I provide the flower beds in the enclosure and other members "ante up" in other ways. We hold race meetings in which our gates are anything up to 6,000. Yet last year we managed to finish with only £23 on the credit side.
No race meeting, not even a small one, can possibly carry on with that sort of margin for very long. It is doubtful if we shall be able to keep it going. There are a good many of the smaller racecourses in Devonshire. There is Buckfastleigh, another beautiful little course, which staggers on from year to year, there is Newton Abbot, which although it has the smallest committee, ran 200 runners at the last meeting and is not too happy about its position, and there is Tomes which has gone out of business altogether.
The Chancellor cannot want to see these small racecourses closed down. After


all, they bring in a certain amount of revenue. For instance, the meeting at Haldon brought him £3,000 last year. Not only do they bring in revenue, but they encourage horse breeding and help to keep up the morale of the population in these times of tribulation and wars and rumours of wars. Therefore, I hope he will give rather more thought to this matter than he has promised between now and the Report stage. I feel that my hon. and gallant Friend the Member for North Fylde and those who have followed him have made out a very definite case.

Mr. Keenan: I rise to say a few words because of the exaggerated statements which have been made on this matter by hon. Members opposite, not only today, but also last night. I have wondered for a long time whether the racing industry existed for purposes other than that of entertainment. I am very well aware of the financial aspect of the matter, and there may be something in the fact that only £91,000 was made by certain racecourses; but that sum does not represent what is made by the racecourse executives who remunerate themselves pretty well. In Liverpool, for instance, we have about 16 days' racing a year. I am quite prepared to recognise that the industry employs thousands of individuals, but, unfortunately, it attracts to itself lots of undesirable people. The fact remains that the whole of the cost is paid by the small fellows at the bottom who have to work for their living.
The meeting at Ascot last week was an example of the discrimination that takes place at race meetings. In spite of the high cost and Entertainments Duty, one could not get into the enclosure unless one were dressed at Moss Brothers. The fact remains that it is a privileged sport, although I am not unmindful of the fact that the working classes do participate in it to the extent that they gamble. I am not denying that they will insist upon doing that whether we like it or not.

Brigadier Rayner: If the hon. Gentleman will come down to the racecourses I have mentioned, he will find that there is no privilege or discrimination of any kind at their meetings.

Mr. Keenan: I live within half an hour of Aintree racecourse, and I have seen two Grand Nationals, so I am not without some knowledge of the matter. I know that unless one can afford to pay 10s. one sees very little of the race.
My point is that the case for the value of horse racing has been over-stated in this debate. I was amazed at the statement of the hon. and gallant Member for North Fylde (Captain Stanley), who moved this Clause, that exports of blood-stock were valued at £5 million; but imports in 1950 were valued at £5,591,090, so we had to supply the credit to buy those.

Captain Stanley: Would the hon. Member quote one case where we used dollars to buy bloodstock last year?

Mr. Keenan: I do not think I mentioned dollars, but if I did the fact remains that we do not receive dollars for all that we export. Nearly £6 million was paid for stallions, mares and geldings. Nearly £500,000 of that was for geldings and we do not bring them in for breeding purposes. The value of this industry in providing exports is rather cancelled out by what we import.
We should view this thing in its right perspective. Horse racing has been contrasted with football and speedway, but horse racing already enjoys concessions that do not apply to football, speedway and dog racing. Football is an entertainment to the workers. Horse racing is also an entertainment, but the workers do not see as much of it as I used to see when I stood at the rails at Aintree. I do not see that the Jockey Club or the National Hunt Club are in any way dependent upon a concession on Entertainments Duty. This so-called industry is quite capable of facing its own responsibilities and the industry should pay its fair share of taxation.

Brigadier Head: I think the hon. Member for Kirkdale (Mr. Keenan) took a rather jaundiced view of horse racing, both as an industry and as a sport, perhaps as a result of his not being able to see over the next man in front of him at Aintree. I disagree very strongly with his remark that racing is not democratic. I think that that is the one thing racing is. I myself as a stable boy have led a horse round the paddock


at Ascot. Perhaps that will give the hon. Member some cause to rejoice.
I want to endorse what has been said by my hon. Friends concerning the breeding aspect of racing. I think the Financial Secretary to the Treasury would agree that that is not entirely a matter of exports. It is a source of drawing invisible imports as well, in the sense that people come to this country to buy horses and to visit our racecourses and that is dependent on the prestige of our bloodstock. If all British horses go slower and slower and all races are won by foreigners we shall look silly; and the British public would not like it either.
The Chancellor may well lose the value of this duty that he proposes to impose owing to the effect it will have on breeding and thus on export. Hon. Members may say that is a far-fetched argument. They may ask, "What do you know about it?" I spent the early years of my life studying this matter, and I was attached to a racing stable for some time, although I have no interest in a horse or part of a horse at present. I assure the Committee that the effect of this duty will be in direct opposition to what the Jockey Club is now, rather belatedly, trying to do for racing.
Any hon. Member who has studied racing since the war must have noticed the trend whereby foreign horses, and particularly French horses, win the classic races and the long-distance races for mature horses. The reason for that is partly, though not entirely, due to the fact that we race much more with two-year-olds and have a much larger proportion of five-furlong races with very young horses. The French do not do that. They run their horses as three-and four-year-olds and on average race over longer distances.
The Jockey Club is now trying to alter the impact of stake money so as to give greater encouragement to those who breed long-distance racehorses which run when they are mature. It is common sense that if a man can win a fairly big stake with a two-year-old that is not going to encourage him to wait until that horse is three years old. If we want to encourage races for mature horses over long distances we must put up the stake. The Jockey Club are trying to do that

and to diminish the racing of immature two-year-olds, such as the March races for two-year-olds at Liverpool.
If this extra duty is imposed, racecourses will lose money. They will have to economise on their stake money, and if one does economise on the stake money—a problem which I am sure the Financial Secretary has not had to tackle—one is confronted with the problem of how to attract adequate fields, because the British public do not like to see only three or four runners in a race.
How will the racecourses ensure adequate fields? I will tell the Financial Secretary. They will have to increase the number of two-year old five furlong races and other five furlong races. Those attract a field because races which offer a quick return on money spent on a yearling always have done so. If they do that then the impact of this policy, partly due to Entertainments Duty, will be reflected by the breeders. That is to say, the big run of breeders who are concerned with the majority as opposed to the really exclusive mares will attempt to breed two-year olds that can go five furlongs at an early age, for there will be a strong demand for such animals.
The two most transmissible qualities in the genetics of racehorses are precosity and speed. Therefore, there is a great attraction in any case for the breeder to go in for precosity and speed. The effect will be to encourage this policy and one may gradually find, over a matter of years, that this trend which has been going on since the war, will increase rather than decrease and that British bloodstock will include more and more of these precocious animals that can go five furlongs. They are a very attractive proposition for getting one's money back, but they in no way favour the production of race horses of classic or staying type.
If this duty is imposed, racecourses will have to economise on stake money and will have to attract big fields on the cheap. If they do that, they will be forced into having more and more of this particular type of race which the Jockey Club are now trying to reduce in number. Therefore, I beg both the Chancellor of the Exchequer and the Financial Secretary to think again. If I may say so, in both of their careers they might be quoted as examples of precosity and speed. Before they come to a decision on this matter I


would ask them both to reflect on the more classic examples available, which show the merits of maturity and stamina, and which, each in his own sphere, are so well exemplified by Colonist II and my right hon. Friend the Member for Woodford (Mr. Churchill).

Mr. Paget: Would not the simpler way of achieving the object the hon. and gallant Member for Carshalton (Brigadier Head) has in mind be to abandon two-year old racing before June?

4.30 p.m.

Brigadier Head: The hon. and learned Member will have to refer to the Jockey Club, not to me.

Mr. George Wigg: I wish to ask the Financial Secretary not to look at this problem purely from the angle of the money which he makes out of it. This tax, which is really one levied upon people's leisure time pursuits, is regarded by the Treasury as a source from which they can get a little extra money this year or the year after. They tend not to worry very much about the social consequences of policies which they initiate almost by accident, as it were.
One of the regrettable things that has happened in this country during my lifetime has been that more and more of us have tended to go and watch bigger and bigger events and to take a less and less active part in them. The foundation of football is not to be found at Wembley, but in a crowd of youngsters kicking a ball about and trying to get it between a couple of coats at each end of the field. Likewise, the man who is a speedway racer on a very expensive machine is only part of the game. The boy who cycles on a grass field on a bicycle may be the speedway rider of tomorrow. Likewise, in the case of horse racing, Ascot and the Derby are only part of the story.
The foundation of horse racing is not the great occasions. It is not Ascot, nor even the Derby. It is the small point-to-point meeting. The participants do not care very much whether they win or lose. What matters to them is the fact that they are engaged in a sport which they love. They wish to spend their time in a way which gives them the maximum amount of pleasure, and so the small events have their roots in the enthusiasm of those who

take part. During my Army experience I never had much money, but I have been a race horse owner. I went to a sale in Baghdad at a cotton plantation which I believed was started by a Socialist Peer, Lord Chelmsford. A noble animal was brought in, I bid 100 rupees by way of a joke and it was knocked down to me. It never won a race for me, but when I sold it it won a race for someone else.
That is by the way. That sort of thing is not possible in this country—I wish it were. I think it would be far better if more people could take an active part in it. I am sure that the Financial Secretary or the Chancellor is aware of the effect of this tax on speedway racing and horse racing, and indeed upon football and cricket. If it persists we shall end up with centralised racing and just a few courses around London and the big cities. All the small speedway clubs will be put out of action—some of them have gone already. It will become impossible for the poorer professional football teams to carry on, which would be thoroughly regrettable.
The social consequences of over centralisation of sport would be profound. Let us not forget that sport and happiness are intermixed. I think that one of the reasons why racing was carried on during the war was not only because of the value of the bloodstock industry, but because when people are feeling a bit down—perhaps they have not had a letter or leave—the fact that they can slip into the canteen and put a couple of bob on something in the 4.30 boosts their morale whether they win or not. Some people object to that, but it is a pleasure which is a leisure time occupation and therefore performs, as the Financial Secretary knows, a very important part in our national life.
If, therefore, my right hon. Friend looks at this problem as one in which his concern is a source of revenue and he cares little about the social consequences it will lead to the impoverishment of our national life, and life will become even more gray than some of us sometimes think it is. I hope that my right hon. Friend really means business about his review which was promised last night in regard to speedway and horse racing, and that before very long he will come to the House, having looked very carefully at the matter, and will produce a policy in


relation to these sports which is not only concerned with what he can get out of them.

Captain Crookshank: I do not wish to bring this fascinating discussion prematurely to an end, but it would be as well to say a word from here. It has been fascinating because it has increased our knowledge of our fellow Members to an extraordinary degree. We knew that some of our colleagues, including one on this bench, were owners of successful horses. We did not realise that my hon. and gallant Friend the Member for Totnes (Brigadier Rayner) provided flower beds for his local racecourse; or that the hon. Member for Kirkdale (Mr. Keenan) had attended 20 Grand Nationals and had only seen the horses pass by. What else he expected to see I do not know.

Mr. Keenan: Might I point out that on the level one only sees, as I said, the horses pass. If one can afford to pay one can go on the stand and see all the race, which I have done when I have been able to afford to go on to the stand.

Captain Crookshank: Either way is equally pleasant, and I hope that both are on the level.
We had a disquisition from my hon. and gallant Friend the Member for Carshalton (Brigadier Head) about the common mare, the methods of breeding and the points which had to be looked for. Then we discovered that the hon. Member for Dudley (Mr. Wigg) had also been an owner. We knew none of this half an hour ago, and it is a very interesting addition to our late night debate of yesterday.
The fact of the matter is that racing is one of the old British sports, and on whatever side of the House one may sit and whatever political views one may have, I am sure that everybody would deeply regret the disappearance of it in this country. Quite apart from the economic advantages, such as the export trade and so on, which have been pointed out, we all want to see this sport continued, not only the great meetings which attract millions of people, such as the Derby, but the more humble meetings up and down the country, particularly in the spring, when the local point-to-point meetings are held.
If it can be shown, as it has been argued and shown, that to increase the

tax on this form of live amusement—and let us never forget that that is what it is—will reduce its scope and diminish all over the country the possibility of having races, it is good that the right hon. Gentleman has said that he will look at the matter again. Not only is it a very old sport but, when all is said and done, if we are to have the breeding of the horses it is only through racing that the theories of breeding can be tested. There are other animals which are pedigree animals, but they are tested in other ways. No one, for example, suggests that dairy cattle should go racing. One of the points to which one looks so far as they are concerned is the gallonage of milk. But when race horses and thoroughbreds are concerned the only way that a test can be made is by racing one against another.
Let us in these changing days realise that there are some things in this country that ought to be preserved, and among these are most noticeably our ancient historic sports. It does not matter whether one quotes Charles II or Queen Anne in this connection. There have always been those who have had the power and the funds with which to test their theories, and as a result the people have had amusement, the breeding of thoroughbreds has continued and bloodstock has been exported all over the world.
That is really important, and I am, therefore, very glad—I repeat this because it happened so late at night that it is not in today's HANSARD—that the right hon. Gentleman has said that he will look at this whole matter again. We emphasise that this is a live sport, because in the case of the amelioration which was made in the Entertainments Duty, for example, on the living theatre, which has some kind of connection here, the emphasis was on the living person acting as compared with a celluloid figure in a film. So here we are dealing with live horses, jockeys, breeders and the rest.
We are, therefore, gratified that the Government are to look at this again. We shall not today press them to a Division, because we recognise that it would be, extremely embarrassing for all hon. Members on the Government side, who have shown quite clearly in the debate—and I am certain that it is equally true of those who are not present—that they are at one with us in wanting to see racing continue, not necessarily for their own benefit—that would be asking too


much—but for the enjoyment of the people they represent throughout the country. This is a completely non-party issue, and, as the Government say they will look at it again, we shall not press them to a Division.

Question put, and negatived.

New Clause.—(AMENDMENT OF S. 22 OF FINANCE ACT, 1920.)

Subsection (1) of section twenty-two of the Finance Act, 1920 (which as amended by subsequent enactments provides that a claimant who is compelled by old age or infirmity to depend on the services of a resident daughter shall be entitled to a deduction of twenty-five pounds shall he amended by substituting the words "fifty pounds" for the words "twenty-five pounds."—[Mr. G. Longden.]

Brought up, and read the First time.

Mr. Gilbert Longden: I beg to move, "That the Clause be read a Second time."
This matter was the subject of correspondence between the Financial Secretary and myself some time ago, and the upshot of it was to the effect that the Chancellor would bear the point in mind when framing his Budget. It is not a very big matter, but it affects a number of small people, and I wish to take this opportunity of bringing it to his notice once again. By inadvertence, which is wholly my fault, there are two words left out of the Clause as printed. The words "inter alia" should come after the word "provides" because, as we shall see, the relatives in respect of whom this claim can be made are more than three in number, and are not only of the type mentioned.
I can very briefly refresh the minds of the Committee about whom this Clause is intended to aid. Section 22 (1) of the Finance Act, 1920, allows a tax deduction:
If the claimant proves that he maintains at his own expense"—
and it is satisfactory to learn from subsection (3) that the male embraces the female—first,
a relative of his or of his wife who is incapacitated by old age or infirmity
from looking after themselves; or, second,
his or his wife's widowed mother, whether incapacitated or not"—

and in those two cases he must also prove that the income of the maintained relative does not exceed £50 a year—or, third, a resident daughter upon whose services he is compelled by reason of old age or infirmity to depend. In any of those cases he shall be entitled to a deduction of £25 in respect of each maintained relative.
If my Clause is accepted, in future such a person will be entitled to a deduction of £50. I have never been able to understand why this allowance is smaller than that allowed in similar cases under the same Act, and that is one reason why I propose it. Another reason is that, in 1920 the State did not think fit to tax quite so much of the taxpayer's income out of his pocket as now. Further, the value of money has been considerably reduced.
I cannot do better than repeat some words used during the Committee stage of the Finance Bill in 1920. They are as follow:
We are dealing now with people who have to eke out an existence in these days of high prices, which make life intolerable to them."—[OFFICIAL REPORT, 7th July, 1920; Vol. 131, c. 1549.]
I commend those words to the Chancellor and ask him to put himself in the place of these people. I ask the Chancellor to read the debate during the Committee stage in 1920, in which case he will see that concessions rained down like manna from a golden Treasury, and it would benefit us all if he would try to emulate that example. Whether it was that the then Chancellor had got tired of making concessions, or whether it was because the proposal was not sufficiently strongly advanced, I do not know, but it was not conceded. And that is why I now beg to move it again.

4.45 p.m.

Mr. Bowles: I wrote to my hon. Friend on behalf of a constituent of mine on the same point, and he kindly replied on 31st May, saying that my constituent was wrong in thinking that Sir John Anderson was responsible for the decrease in the allowance, and went on to say that this £25 relief had been granted ever since the Finance Act, 1920. My constituent has written to me again today, sending a stamped addressed envelope. [Laughter.] I find that the


poorer people are the most generous and understanding, and I mention that fact because it shows that my constituent is serious about this.
He says:
I thank you very much for taking the trouble to put my case before the Treasury. I should not have troubled you again on this matter hut for the fact that in the letter to you from the Treasury they say that I am under a misapprehension in thinking that Sir J. Anderson was responsible for decreasing the allowance for a daughter's services, and that it has stood at £25 since its inception in 1920. To that I say the allowance was £50 in the early '40s, and that I received it.
I have not given my hon. Friend notice of this because I have only just received this letter, but I should be obliged if, in reply, he would explain the historical position.

The Financial Secretary to the Treasury (Mr. Douglas Jay): The misunderstanding to which my hon. Friend has just referred may possibly arise from a confusion between this allowance and the housekeeper allowance, which is rather similar. The housekeeper allowance does stand at £50, and it is possible that my hon. Friend's constituent was eligible for that in the early 'forties. I will look into that further.
This particular allowance, which, as the hon. Member for Hertfordshire, South-West (Mr. G. Longden) has rightly pointed out, can be claimed by anyone
who, by reason of old age or infirmity, is compelled to depend upon the services of a daughter resident with and maintained by him or her.
That has stood at £25 ever since the Finance Act, 1920. The hon. Gentleman made a persuasive case for a change in this allowance and I wish to tell him quite frankly the difficulty we see in doing as he wishes.
This allowance is something of an anomaly; and, indeed, has long been recognised to be such. It is somewhat akin to the housekeeper allowance, because it is given in virtue of a daugther who is resident with and helps to look after an aged or infirm person. The housekeeper allowance is, in practically all cases, confined to a household in which there are young children, and that has always been recognised as the main justification for it.
This allowance, on the other hand, goes beyond that, and it is in this respect, I

think, rather hard to defend. It can be claimed where the aged or infirm person depends on the services of the daughter; it is confined to a daughter and applies to no other relative. It could be argued with some force that if there is a case for giving it in the case of a daughter, there is an equal case for giving it for a niece, or perhaps for a granddaughter, and for that reason it has always been regarded as slightly shaky among Income Tax allowances.
The hon. Gentleman referred me to the Committee stage in 1920, when this allowance was first introduced. As a matter of fact, I had already looked at that when I saw this new Clause on the Order Paper, and I saw that the then Chancellor, Mr. Austen Chamberlain, more or less admitted in granting this allowance that there was not really a very good case for it. He said, in somewhat lukewarm language:
I am not sure whether I am wise, but, if the Committee are pleased to accept this Amendment, I shall not oppose it."—[OFFICIAL REPORT, 7th July, 1920; Vol. 131, c. 1549.]
It is quite clear that that was not a very enthusiastic blessing.

Mr. Oliver Lyttelton: It is a form of words which I commend to the
hon. Gentleman.

Mr. Jay: I take note of the form of words, but I am not sure that they are a very good precedent. However, we would not suggest, slightly shaky though the case may be, that it would be right to withdraw the allowance at present. We think that, on the ground I have suggested, this is not really the best allowance to pick out for an increase.

Question put, and negatived.

New Clause.—(UNIFORM ALLOWANCES FOR OFFICERS OF HIS MAJESTY'S FORCES.)

In Rule 10 of the Rules applicable to Schedule E to the Income Tax Act, 1918, there shall be inserted at the end thereof the following words:—

"Provided also that the Treasury shall for the purposes of this Rule fix sums in respect of the maintenance of uniform of Officers of His Majesty's Forces not being less than the following:—

Royal Navy



£


Captains (or female officers of equivalent rank) and below
50


Flag Officers (or female officers of equivalent rank)
55

Brought up, and read the First time.

Mr. Profumo: I beg to move, "That the Clause be read a Second time."
This Clause seeks to increase that part of the pay of officers of His Majesty's Forces which is free from tax as an allowance in respect of the upkeep and maintenance of their uniforms. For the benefit of the Committee I would point out that the present allowance, in all cases, is £15 less than the figures which appear in the Clause. These figures have remained steady and constant for the last 33 years—ever since the date in 1918 when this concession was initiated.
I base my case on two main factors. The first is that the basic cost of clothing has risen since the war out of all comparison with the present allowances. The second is that Purchase Tax is now levied on all the articles concerned. They are two distinct factors and I should like to speak on both issues. It seems clear to me that the system is not at present operating as it was originally intended. Without wearying the Committee too much, I think it is germane—in fact it is essential that I should read Rule 10 of Schedule E to the Income Tax Act of 1918 on which the whole of this concession is based.
That Rule says:
Where the Treasury are satisfied with respect to any class of persons in respect of any salary, fees or emoluments payable out of the public revenue that such persons are obliged to lay out and expend money wholly, exclusively, and necessarily in the performance of their duties in respect of which such salary, fees or emoluments are payable …
And this is the point:
… the Treasury may fix such sum, as in their opinion represents a fair equivalent of the average annual amount laid out and expended as aforesaid by persons in that class, and in charging the tax on the said salary, fees, or emoluments, there shall be

deducted from the amount thereof the sums so fixed by the Treasury.
It is quite clear that the intention was that no part of an officer's pay necessarily spent on uniform should be taxed in any way.
My first contention is that the present allowances fail adequately to cover the annual average amounts expended on uniform today. At first sight it may appear to hon. Members in all parts of the Committee that officers have to provide themselves with less uniform today than they used to have to provide when this concession was introduced or indeed at any time before the war. I would point out, against that, that one must remember the cogent factor that the quality of cloth and material today is in no manner similar to what it was before the war. Therefore, the wear and tear is of a more speedy nature that it used to be.
Over and above that, the real point I wish to make is that the basic prices, without taking into consideration Purchase Tax, have risen since the war by two or even three times. May I give just two examples? and then I will leave the technicalities of the case to my hon. and gallant Friends who know more about the details. The first example is that before the war the cost of a naval officer's greatcoat was £11 15s. 6d. Today, it is £29 17s. 6d. before Purchase Tax is added. Prices of Army and Royal Air Force uniforms are more or less equivalent. The cost of a Service jacket and trousers before the war was £9 16s. 6d. It seems scarcely credible, but that was the price. Today, the cost is £28 6s. without Purchase Tax.
Now what is the other side of the picture? Perhaps we had better go back to our 1918 principle, which was that no officer should be taxed on the maintenance or upkeep of his uniform. It seems to me entirely contrary to that principle that officers should now have to bear the pernicious imposition of Purchase Tax on their uniforms. In fact, I go further. I challenge the Financial Secretary to deny that this is an infringement of the law. I am sure there is no intention to break the law, but those are the facts. The Purchase Tax on a naval greatcoat is £7 10s. and on a Royal Air Force or Army Service jacket and trousers it is £6 12s. When we take into consideration that


further factor, it means that the cost of uniform of all types has, since the war, gone up to four times what it was before, whereas the allowance has remained stable at what it was originally in 1918.
Can justice be said to have been done when other ranks in the Armed Forces are, quite rightly, issued free with battle-dress to replace that which they wear out. If they burn their uniform or spill acid on it, they may have to pay for replacements, but otherwise, after fair wear and tear, they are issued free with new battledress. But, for exactly the same article, officers have to pay the full price, plus Purchase Tax. I think that hon. Members will appreciate the force of that argument.
The attitude of the Government on the question of officers' uniform was announced by the predecessor of the present Minister of Defence in this House on 3rd November, 1948. He said:
It has been agreed in principle that the State should in future meet the reasonable cost, including Purchase Tax, of officers' uniforms on commissioning"—[OFFICIAL REPORT, 3rd November, 1948; Vol. 457, c. 855.]
It is surely a sine qua non, therefore, that the Government should take into consideration Purchase Tax when assessing allowances for the maintenance and upkeep of these uniforms.
I was a little surprised at Question time this afternoon when the Secretary of State for War, in reply to a Question from one of my hon. Friends, said that in assessing the allowances for the upkeep of officers' uniforms Purchase Tax was taken into consideration. I cannot believe that he had considered that statement very carefully. He made it in reply to a supplementary question, and I assume that if he had been advised he would not have made the statement, because it is contrary to the facts. Purchase Tax cannot possibly be included in the present allowance.
I should like to take the case a little further. As a result of the statement by the former Minister of Defence, the initial allowance to officers on commissioning was doubled in the case of the Royal Navy and the Army, and the allowance was increased to nearly double what it was previously in the case of the Royal Air Force, in spite of the fact that less uniform is now needed by officers in His Majesty's Forces. I submit that

this is direct proof that the cost of providing and maintaining uniform on the present scale has risen so steeply since the war that the Government should alter the allowance.
5.0 p.m.
Either they must relieve officers of what I call the unlawful burden of Purchase Tax or, if that is impossible—and it may well be impossible, because I believe if we were to say that officers' uniforms should not attract Purchase Tax they might run into difficulties because some parts of the uniform could be used in other ways, and that might lead to a sort of "brown market"; but, if that is impossible, then as an alternative it is incumbent upon the Government to make a fair allowance to cover Purchase Tax.
I think I should mention the cost involved—I see that the hon. Gentleman opposite is turning over the pages to see whether I have the right figures. If we raise allowances by £15, which is the minimum that we suggest, the cost would not be very great. May I digress for a moment to explain to the Committee why we have put a minimum figure in the Clause? It is to maintain the existing bargaining power which the Service Ministries have year by year with the Treasury, so that if Purchase Tax is raised higher—which Heaven forbid, although one does not quite know what is in the minds of hon. Gentlemen opposite—or if prices rise the Service Ministries can bargain for an increase in the allowance without having to come to the House to have the law changed.
If we make the increase of £15, then at 9s. 6d. in the £ that would amount to £7 2s. 6d. per officer per year, which I calculate to be a sum of £550,000. I suggest that this should and could be regarded as a legitimate expense in connection with our re-armament programme. Viewed against the background of a Budget of £4,700 million, the majority of which we have been told time and again is in respect of our defence Forces, this sum of £550,000 is a meagre and puny figure indeed.
May I make a point which will impress itself upon hon. Members opposite? It is one about which I feel very strongly myself. Since the war hon. Members opposite have time and again


advanced the argument that our Armed Forces must be democratic and that it must be possible for people who go into the Armed Forces to rise through the ranks to obtain their commission—to find a field marshal's baton somewhere in the barracks. They say it should be a citizen Army; and that is quite right. But as the law operates at the moment, that is not possible. A man is precluded from the right to a commission.
When other ranks consider whether they wish to become officers and to accept the responsibilities of an officer, one of the first things they ask themselves is, "What is it going to cost?" If they have to pay too much for their uniforms we shall find many cases in which men will refuse point blank to take on the responsibilities of an officer. I think that is a significant fact which the Committee ought to bear in mind.
I hope the Financial Secretary will see the force of the argument behind this Clause. In fact, I hope he will be able to accept the Clause but if, by any chance, I have raised issues which he has not appreciated before, then I hope he will regard them as sufficiently important to review the matter and to give to the Committee an undertaking that he will consider it before the Report stage.

Mr. John Tilney: I shall detain the Committee for only a few minutes, but I want to speak very strongly in support of the Clause which has been moved by my hon. Friend the Member for Stratford (Mr. Profumo). He has told the Committee about Rule 10 of Schedule E of the Income Tax Act of 1918 and has backed it with the argument of what was said by a former Minister of Defence in the House in November. 1948. It is surely wrong that, in carrying out his job, any officer should be penalised through having to pay a tax on the uniform which he needs to perform his duties.
What happens in practice? An other rank now receives a clothing allowance of 1s. 3d. a week, which I calculate is £3 5s. a year, tax free, out of which he has to maintain his underclothing, his socks, his towels, and so on; but his battledress, his greatcoat, his boots—except in the case of repairs—are all

maintained for him free of charge. If he loses any article, such as a battledress, he is able to replace it by purchase without any Purchase Tax being levied and to do so at the vocabulary rate, less 25 per cent.
How different is the case of the officer. The Financial Secretary may say that the officer gets a rebate on taxation. For instance, a captain of the Army gets up to £25 a year rebate, but in calculating the effect of that we have first of all to deduct one-fifth for earned income allowance. At 9s. 6d. in the £ the sum is then reduced to £9 10s., by comparison with £3 5s. for an other rank. An officer up to the rank of captain is only £6 5s. better off than an other rank, and with that extra money he has to buy many things. After his initial allowance he gets nothing free at all—and one must remember that many officers of a certain age in the Army have never had that substantial initial allowance.
Out of that £9 10s. the officer has to maintain all his equipment and clothing—much more than an other rank; and he has to do that at the vocabulary rate, plus 10 per cent. for Departmental expenses. Moreover, we have to add 33⅓ per cent. for Purchase Tax on most of those figures. I have here a list of various items which can be bought from the quartermaster's stores, with the price which an officer has to pay. These figures may interest the Committee: anklets, web (category CG0081)—3s. 11d. for an other rank against 7s. for an officer; berets, blue—4s. 6d. against 8s. 9d.; blouses, battledress—£1 9s. 3d. against £2 12s.; trousers, battledress—£1 8s. 7½d. against £2 11s. 4d.; drawers, woollen, long—10s. 10d. against 19s. 5d.; greatcoats, £3 3s. 2d. against £5 12s. 2d. In each case the article is identical.
I could go down the list so as to show that in each case the officer has to pay a much greater price for identically the same article—even down to towels, where the figures are 5s. against 8s. 4d. for the officer, at which figure I believe it is a thoroughly bad buy. Not only has the officer to buy all that equipment but in many units he is expected to have a Service dress, as my hon. Friend has already said. The Financial Secretary may argue that a Service dress is no longer essential, but at any rate a No. 1 dress is essential according to an A.C.I of two years ago.
I have here a letter from a young captain friend of mine who says he has had to buy his No. 1 dress. He had to go to his regimental tailor and he found that the best quality material cost £35 10s., plus £8 17s. 6d. Purchase Tax, and the second best quality material cost £33, plus £8 5s. Purchase Tax. He points out that had he been sent to a unit in Germany he could have taken advantage of the Board of Trade concession and need not have paid any Purchase Tax at all.
He says:
My point is that because I have been posted to a unit stationed in the United Kingdom I am obliged to pay an £8 5s. fine.
I should like very strongly to support by hon. Friend, and I hope that the Committee and the Financial Secretary will accept this new Clause.

Commander Noble: My hon. Friends the Members for Stratford (Mr. Profumo) and Wavertree (Mr. Tilney) have covered the ground very fully, and I shall not detain the Committee for more than a minute or two; but there are one or two points I should like to make. I think my hon. Friend the Member for Stratford made quite clear what are the reasons why we propose this Clause—first, rising prices, and, second rising Purchase Tax.
Hon. Members in all parts of the Committee are fully aware of rising prices when they try to buy a new suit these days. Of course at the same time as the price of clothes goes up so does the Purchase Tax go up as a percentage of that price. I think it was my right hon. Friend the Member for Aldershot (Mr. Lyttelton) who said the other day that when Purchase Tax was first brought in it was to cut down consumption of articles in short supply but that now it had become a very profitable source of revenue for the Treasury. I am sure that there never was an occasion—there certainly is not now—when we wanted to cut down the consumption of uniforms because they were in short supply; and I am sure we should never want to raise more revenue out of Service uniforms.
There is another point that was raised by my hon. Friend the Member for Stratford, and it was mentioned at Questions today, and that is utility cloth. As far as I know there is not in any of the

three Services a utility uniform, and, therefore, there is no type of uniform the purchasers of which have the benefit of buying free from Purchase Tax. I shall come back to that in a moment.
There is no doubt that these prices of uniforms bear very hardly on all three Services; and do not let us forget that officers have, at the same time as they pay high prices for uniforms, also to pay high prices for civilian clothes. Some examples of high prices have been quoted, and I should like to add one or two more examples from the Navy. Officers of the Royal Navy and the Reserves do not have to buy the same amount of uniform that they did before the war. As hon. Members know, the full dress and the frock coat are gone, and I must say I am a little sorry at that. However, naval officers have to wear what one may describe as their Service dress, that is, the monkey-jacket, on more occasions than the officers of the other Services.
My hon. Friend quoted the price of a naval officer's greatcoat. Let me quote also the prices of a monkey-jacket and trousers. I take the case of a lieutenant though, of course, the price of the article goes up with gold lace of rank. The cost used to be, before the war, £10 12s. 6d. and it is now £38 7s., including £7 10s. Purchase Tax. An evening mess jacket, waistcoat and trousers which is compulsory and, which used, before the war, to cost £11 12s. 6d. now cost £43 1s., including £8 9s. Purchase Tax. A little mental arithmetic by hon. Members will enable them to realise very soon that the tax free allowance goes in Purchase Tax alone.
There are three ways of helping these officers. First, by freeing uniforms and accessories from Purchase Tax. Second—which would not help them quite so much—to produce, not a utility uniform, but a utility price range, by which an assessment would be made of what utility uniforms would cost, and then to put Purchase Tax only on the amount costing above that price; and this would cut down Purchase Tax to be paid on uniforms. Third, of course, because I know that the Treasury are always rather reluctant to create privileged classes through exemption from tax, there is the very much better way, that of accepting this Clause, and, therefore, increasing tax free allowances.

5.15 p.m.

Mr. Bellenger: It is rather difficult to ask the Treasury to accept Amendments or new Clauses which involve them in extra expenditure, but I do think that this Clause is worthy of my hon. Friend's consideration. The Officer, unlike the other rank, has to provide his uniform. It is true that he gets an initial allowance, but it is questionable, in my opinion, whether it is sufficient to fit him out properly for his duties.
The uniform allowance on which an officer gets tax rebate should really be considered, and I would suggest to my hon. Friend that, if he cannot accept this Clause in its present form, he should consult the Service Ministers to see what they think about it. I have reason to believe that they will urge strongly on him and on the Chancellor of the Exchequer that sympathetic consideration should be given to making additional allowances to officers. I hope that my hon. Friend will not reject the idea entirely.

Mr. Jay: My right hon. Friend the Member for Bassetlaw (Mr. Bellenger) and the other hon. Gentlemen who have spoken have argued the case on the ground that uniforms, including Purchase Tax, now cost a great deal more than they did when these allowances under Rule 10 were first fixed. I am not quite sure that hon. Members fully appreciate the relation between the working of Rule 9 and Rule 10 in this matter.
Rule 9, Schedule E, provides that any Income Tax payer may claim a deduction for any expense "wholly, exclusively and necessarily" incurred in the performance of his duties. What Rule 10 does is to enable the Treasury, where they are satisfied that members of any class of persons paid from public funds are obliged to spend money in that same way, according to that same definition—"wholly, exclusively and necessarily" in the performance of their duties—to fix a special sum which persons in that class are then entitled to claim as of right without making a specific claim, as the rest of us do when we have expended a particular figure, whatever it is.
The existence of these conventional scales under Rule 10 do not debar an officer, any more than any other taxpayer, from claiming under Rule 9 the actual

figure he has spent, whatever it may be. It is possible for an officer, if he has spent a sum on uniform necessary in the performance of his duties, to make that claim; and, presumably, a great many of them do, in fact, do that, if they have a good claim. Therefore, I think the hardship is not, perhaps, as great as it appears.
Nevertheless, having listened to the debate, it does seem to me that there is a case against continuing these rather out of date or, at least, rather long-standing scales, if we are to have any scales at all, and I therefore propose to follow my right hon. Friend's suggestion, and consult with the Service Ministries on this subject to see whether any revision is necessary.

Surgeon Lieut.-Commander Bennett: Could the hon. Gentleman say whether it is generally known in the Services that officers are allowed to claim on any higher scale than that laid down? I do not think it is known in the Navy.

Mr. Jay: I have no reason to believe that it is not, but if we consult Income Tax experts we find out these useful pieces of information.

Lieut.-Commander Gurney Braithwaite: I am sure that the Committee is gratified by the terms of the Financial Secretary's reply and by his revealing remarks on the subject of Rule 9, which escaped most of us during the time when we were wearing uniform. I rise only to ask the hon. Gentleman whether such concessions can be made retrospective.
There is one point in particular upon which the hon. Gentleman may be able to help. It concerns that section of the Clause which applies to uniforms of the Royal Navy. I do not know whether the hon. Gentleman is aware that at the end of this year the gold braid worn by Royal Navy Volunteer Reserves is to be altered, much to the regret of many of us. The "Wavy Navy" is to disappear, and officers on reserve will wear the straight stripes of the Royal Navy, and the alteration is bound to cause considerable expense.
The Parliamentary Secretary to the Admiralty said, in reply to a suppplementary question which I put to him, that as from 1st January, 1951, the new rig would have to worn by officers called up to do their drill. I am wondering whether that


change, which will be an expensive one, can be brought within the ambit of Rule 9, which has just been revealed to us. If so, I think that would clarify the position of those officers who are contemplating the alteration of their uniforms. I am glad that he is going to examine the matter between now and the Report stage, and that we have been fortified by the intervention of the late Secretary of State for War. I hope that the whole matter may be cleared up by some further remarks from the Financial Secretary which will appear in HANSARD tomorrow morning.

Mr. Paget: When my hon. Friend is discussing this matter with the Service Departments, would he also discuss the question of the initial allowances for uniforms. That also has become obsolete, and when we have so many men getting commissions from the ranks, the fact that they have often to make an expenditure which they cannot afford is a very great hardship and liable to get a man into debt as soon as he becomes an officer. I hope that matter will be considered at the same time.

Brigadier Clarke: I am pleased that the Financial Secretary has agreed to look into this matter, because I raised it at Question time today and received no such assurance from the Secretary of State for War. I should have thought that the Secretary of State for War would have been the first person to assist Members on this side of the Committee to fight for the rights of the Services, instead of trying to obstruct them.
The fact that the Financial Secretary is on our side in this matter may help in the case which I raised with the Secretary of State for War a few years ago, when I was still a soldier. He was urged to give way and say that it was quite absurd that officers should be charged Purchase Tax on their battle dress. On that occasion, the Parliamentary Secretary chipped in to say that miners had to pay Purchase Tax on the clothes they wore when they go down the mines, and when the Secretary of State for War heard that he said that perhaps the officer should also be called upon to pay Purchase Tax. I would point out, however, that the miner does not wear his best suit when he goes down the mine.

Mr. Paget: On a point of order. Has Purchase Tax anything to do with this matter, Sir Charles?

The Deputy-Chairman: This Clause is concerned with officers' uniforms, but I think that literally it does include Purchase Tax.

Brigadier Clarke: The officer has to go on parade in a smart battle dress, and when he is fighting in Korea he may well have to go out on patrol and crawl on his stomach over land which has been fired and become black. He then has to spend something like £2 on renewing his battle dress the next morning at the quartermasters' store. I am sure that this country would never expect an officer on patrol to be charged £2 for the privilege of fighting for his country, because that is what it amounts to on the present scale of Purchase Tax.
The same applies to naval officers who wear their monkey-jackets a great deal more than Army officers wear their best uniforms. When a naval officer goes down in the engine room his uniform, which is very expensive, is liable to be spoiled. He has only to make one slip or to lean against some greasy article to ruin a perfectly good uniform. His uniform then has to be washed out, as he cannot afford to buy a new one, and he should not be expected to pay to serve his country when his country should be paying him a great deal more.

Lieut. - Commander Baldock: I am sure that the Committee will be gratified that the Financial Secretary is to look into these out-of-date allowances because "out-of-date" is exactly the expression that applies to them. These allowances seem to be based on an understanding that officers are still people with private means with which they can eke out their pay. The point which I particularly want to make is in relation to the reserve Forces because it is not only the question of the change of uniform in the case of the R.N.V.R. but also that the annual maintenance grant is very much scaled down in comparison with the maintenance grant for Regular officers.
I hope that when the Financial Secretary is looking into the matter of the Regular Forces he will also consider the Volunteer Forces who presumably have


an equally important role to play in the defence of their country. The appearance of their uniform is just as vital to the morale of the men, who take their cue from the appearance of their officers, and as the volunteer officers have to put their hands in their pockets to a greater or less extent in order to carry out their job and prepare themselves for hostilities, they should be given a reasonable grant for the maintenance of their uniform. I hope that point will be borne in mind.

Surgeon Lieut.-Commander Bennett: There is only one matter to which I should like to draw the attention of the Financial Secretary since he has been so good as to undertake to consult with the heads of the Service Departments about this matter. Would he consider with the Admiralty introducing some scheme to help naval officers who have to spend all their time "dripping with gold lace?" Could not they arrange for some kind of utility range of gold lace or some other way of exempting this gold lace from Purchase Tax? Gold lace worn in almost every other instance is quite rightly regarded as a luxury, but in the Navy it is an essential part of an officer's uniform. Without the gold lace an officer is not an officer. I ask him to try to overcome this anomaly whereby something which is normally regarded as a luxury has in this single instance become a necessity.

Wing Commander Hulbert: While the Committee is grateful to the Financial Secretary—and I assure him that all officers and women officers of the Auxiliary Services will be even more grateful—would he, before he considers what he is going to do on the Report stage—

Mr. Jay: Perhaps I should make it clear that I did not say that this was a matter which would be dealt with on the Report stage. This is a matter which does not have to be included in the Finance Bill. The Treasury can lay down these figures whenever it reaches an agreement.

Wing Commander Hulbert: Then before the Financial Secretary considers it, will he ask his colleagues, the Service Ministers, to announce in orders the provisions of Rule 9?

5.30 p.m.

Mr. D. Marshall: There is only one point I wish to put to the Financial Secretary. While warmly welcoming the attitude he has adopted, I am rather surprised that after six years of power and following a good deal of discussion in other years on this question of Purchase Tax and tax allowance the Treasury now say that Rule 9 does apply as well as Rule 10. If on reflection the hon. Members refers to the arguments put to different Chancellors of the Exchequer, perhaps he will take into consideration the point which he has now made and see whether the question of being able to go back over and above six years could be made possible.

Mr. Profumo: I should like to say "Thank you" to the Financial Secretary for the careful way he has listened to us and the conclusion which he has come to, namely, that this is worth looking into. When he is discussing this with the people concerned could he make it perfectly clear to all people serving in the Armed Forces that they are entitled to ask for a larger amount in respect of uniform, because I am sure that they do not know it. In view of the fact that he has promised to look into the matter, and in the hope that he will do so before the Report stage, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(PAYMENT FOR WAYLEAVES, ETC., FOR ELECTRIC LINES.)

Where a payment being one to which subsection (1) of section twenty-seven of the Finance Act, 1950, applies was made before the sixth day of April, nineteen hundred and fifty, and no deduction was made therefrom in respect of income tax, the amount of such payment shall be allowed as a deduction in computing the amount of the profits or gains in respect of which tax is to be charged under Schedule D on the person by whom or on whose behalf such payment was made.—[Mr. Manningham-Buller.]

Brought up, and read the First time.

Mr. Manningham-Buller (Northants, South): I beg to move, "That the Clause be read a Second time."
It is just a year ago today that the Committee discussed Clause 21 of the Finance Bill of 1950, and it is now Section 27 of that Finance Act. That is a Section to which I must make some reference if the object of this new Clause is to be appreciated by the committee. It provides two


things; first, that tax should be deducted on making payments for easements or wayleaves in connection with electric lines, and, secondly, that the Clause should have an unlimited retrospective effect.
When he was asked for an explanation of that Section, the right hon. and learned Gentleman the present Attorney-General last year said: firstly, that it had been made retrospective to legalise the practice which had been followed for a great many years; secondly, to make sure that it was legal to deduct taxes in the future; thirdly, that those making these payments for wayleaves had always deducted tax and that they were large electric light companies. He clearly implied that there was no question of anyone paying that tax twice in consequence of the Clause, and he said in terms that it did not mean that anyone had to pay any additional taxes. In consequence of that persuasive explanation there was no further discussion upon that Clause, and the Amendment was withdrawn.
In fact, those operating the relay service of broadcasting programmes make payments for wayleaves for the carrying of wires to the loud speakers, the payments for which chiefly go to local authorities. This business of relaying broadcast programmes by wire has been going on for a good many years. I have details of one company which has been operating since 1935. The amount paid annually for wayleaves is in the region of £200,000 a year.
Under the law as it stood before the Finance Act, 1950, they had no power in law and indeed they were not required to deduct tax from the payments that they were making for rents for these wayleaves. The tax not being deducted by them, it presumably was payable by the recipient of the rents, and the right hon. and learned Gentleman confirmed that in what he said last year.
It is an astonishing thing to me that either the Inland Revenue did not know of this practice among relay service operators, who were making these substantial payments for wayleaves without reduction of tax, or, if they did know of it, that they did not inform the right hon. and learned Gentleman. He is the last person I would accuse of deliberately misleading the House of Commons, but I am sure that he will admit that, in fact, last year he did mislead the House,

for he represented that this Section only applied to electric light companies and that the Government were only regularising the existing practice. In terms, he also stated that it would not mean that anyone had to pay any more tax. As I said, the Committee passed the Clause with very little discussion in view of what was said by the right hon. and learned Gentleman.
This Section does impose additional taxation on some of those who make payments for wayleaves for this broadcast service. In fact, this Section has very serious results for those offering relay services. Prior to the Budget Resolution of 18th April, 1950, what these companies paid in rents for their way-leaves they were entitled to deduct from their revenue for the purpose of arriving at their taxable profits. One effect of that Section in the 1950 Bill is that they are no longer allowed to make that deduction.
For instance, for the fiscal year 1950–51 the basis is the profits earned in the preceding accounting year of the company, and amounts expended on wayleaves in that year will be added to their profits and be liable to tax. If they had deducted tax on the payments they made for way-leaves, the effect, of course, would only be to secure that the tax deducted on making the payments would be handed over to the Revenue. They would merely be acting as collecting agents for the Revenue, but those assessments for 1950–51, are based on some payments made before the Budget Resolution, which did not have tax deducted from them. In so far as payments were made before the Budget Resolutions, the companies concerned are asked to pay tax which they had not deducted when they paid for the wayleaves. That is one effect and one instance in which that Section of the 1950 Act imposes an additional burden of taxation.
Now the companies are being asked to pay tax in respect of those sums which they paid without deduction when, it may be, some of the recipients of those sums have also been liable to pay tax, and would have to pay tax, upon those sums. One objection to the operation of Section 27 as it now stands is that the same payment may suffer tax twice over and with Income Tax at 9s. and 9s. 6d. in the £ this is a serious matter.
These relay service operators, when they realised what the effect of the Section upon them would be because they had not deducted tax, and realised that the right hon. Gentleman's observations in explaining the provisions were quite wrong, had an interview—

Mr. Turner-Samuels: Do I understand that Income Tax can now be deducted from the amount of the way leave when the payment is made, and that the case which the hon. and learned Gentleman is putting and complaining about is one in which, for some reason or other, the deduction has not been allowed?

Mr. Manningham-Buller: I will say it again, because I should like to get this matter clear. It is rather difficult and I am trying to put it shortly to save time. Up to the 1950 Budget Resolutions, there was no power to deduct tax. Since the Finance Act, 1950, there was power to deduct tax and a duty to do so, except in respect of very small payments. If tax is deducted, making the payments for wayleaves included in the profits means handing over to the Revenue the sums that have been deducted.
One complaint is that the operation of the change works in this way. The companies are being asked to pay tax in respect of wayleave payments which they made before the Budget Resolutions last year, when they did not deduct tax and had no power to do so. The second point I made was that these payments from which tax was not deducted at the source may have had tax paid upon them by the recipients. I hope I have now made it clear to the hon. and learned Gentleman who, I know, takes a great interest in these matters. I was saying that after the hardship had come to light there was an interview with the Inland Revenue. Despite all that was said there, and in spite of what the right hon. Gentleman had said, I understand that the operation of the Section was adhered to.
I have indicated two effects of the Section. There is a further effect to which I want to draw the attention of the Committee. The practice in the past has been that the companies got an allowance in one year of the amount actually expended for wayleaves in the year before, with the exception of the first and second years of making payments for wayleaves.

The first year's expenditure was the amount actually expended in that year. Perhaps I may give an actual instance, from figures, which may be easier to follow.
5.45 p.m.
Following that ordinary practice, the actual expenditure on wayleaves in 1950 of one company was £29,946. Because of the change, that company is not allowed to treat that expenditure as an expense of their business at any time. Tax has now to be paid on that amount although, as I indicated, some parts of that amount were paid out when there was no power to deduct tax. The result of that is—taking again that particular company—that the sum on which the tax has been deducted in 1951 is £19,000-odd. That does not help them, because that is what they deducted in making payments, and are now paying over to the Inland Revenue. The difference between £26,000 and £19,000 is £7,000. On that £7,000 they will now be required to pay tax at the rate of 9s. in the £. That clearly follows from the study of the figures.
If that is so, it is in spite of what the right hon. Gentleman said. I hope that he realises, although I am not blaming him, that this alteration has imposed additional tax on certain of these companies. I am sure that the Committee, when this Section was being considered, did not intend it and did not desire it to have that effect. I am sure that the right hon. Gentleman in explaining the Clause did not think it had that effect at all.
What we seek to do is to adjust the position so as to provide that the people affected do not suffer this additional tax burden. If they had always had power to deduct tax, then there would be no complaint. It really appears, in my submission, to be wrong that they should be required to pay tax on sums assessed on the basis that they were able to deduct it, when in fact they were not able to deduct it at all when making those payments.
I hope that I have done enough to explain that the Section has operated very differently from the way in which it was explained to the Committee and from what was intended. We have put down this Clause to remedy the matter. The people concerned do not in any way


wish to take advantage of any slip made by the right hon. Gentleman, but they wish to avoid being subjected to this additional taxation liability and being deprived of the tax allowance which, but for the change, they would have been able to get in 1951, equivalent to the amount which they had actually expended in the preceding year.
This is an involved matter, but I have done my best to make it clear. I hope that the right hon. Gentleman, even if he says that he cannot accept the Clause, will agree that there is a case calling for immediate and detailed examination. I hope he will make it clear that he will do his utmost as speedily as possible to see that some of those concerned are not unfairly hit as a result of this change.

Captain Hewitson: I hope that my right hon. and learned Friend the Attorney-General will not turn down the Clause but will agree to the suggestion of the hon. and learned Member for Northants, South (Mr. Manningham-Buller), that there is a need for some examination. I speak with some knowledge of the broadcast relay industry, having been connected with it as a national trade union officer for approximately 20 years and having guided the trade agreements of that industry through their various phases, including helping in wayleaves and wayleave rights in the various areas. We have an intimate knowledge of the sum that has been paid from time to time to local authorities and private owners.
Listening to today's debate and having memorised and read the debate on what is now Section 27 of the Finance Act, 1950, it is quite evident that in replying to that debate my right hon. and learned Friend did not foresee some of the anomalies which have thrown themselves up. This is not a dispute involving my right hon. and learned Friend, but is something that has blown up because of the interpretation which has been applied by the Inland Revenue.
In common justice, I ask my right hon. and learned Friend, if he cannot accept the Clause, to seek to have it withdrawn on the assurance that he will have investigations made into this anomaly and its implications, so that some knowledge may be obtained on the subject before the Report stage. I hope that my right hon.

and learned Friend will look upon this matter with a very favourable eye.

The Attorney-General (Sir Frank Soskice): Both hon. Members who have spoken have suggested that further exploration of this matter might be helpful. That is a view to which I accede and I hope that the matter will be further explored. I should like however to make certain general observations. I think that a good deal of the case that has been made, and made very clearly, in support of the Clause is based on somewhat of a misconception. There are really two rival systems of taxation. Either one is taxed under Schedule D and 'in any given year is taxed upon his previous year's receipts. If one is taxed on that basis, when he looks at his previous year's receipts he deducts as an outgoing the way-leaves that he paid in the previous year. That is one system.
It was always thought that those who made these wayleave payments had not been taxed upon that basis but upon the alternative and different basis in relation to those wayleaves, namely, that they had retained the tax when making the payment to the recipient and that if the payment was made out of taxed income, they had in the ordinary course been allowed to retain the tax which they had deducted, thereby retaining tax relief in respect of the payments.
What we sought to do in the Clause that was incorporated in last year's Finance Act was this. We were under the impression that in all cases, except those where the payment was under £2 10s., the system of taxation which had been adopted in the case of these wayleave payments was that which permitted deduction and that they had not been taxed on the Schedule D basis, in which case they enter into the computation of the profits of the year.
I much regret that I inaccurately stated that all those who make these wayleave payments had deducted tax on them. That is what I was told. I am very sorry I should have misled the Committee in saying that. Those who advised me were, of course, genuinely bona fide under the impression that that was the case. They were aware of these radio relay companies, but thought that in their cases the payments did not exceed the £2 10s. limit in respect of which, under the Section which was included in last year's Finance Act, an option was given to be taxed on the other basis.
Therefore, what we thought we were doing in that Clause was to make lawful something which had always taken place, and taken place without any exception, but as to the legality of which certain doubts had been thrown. We thought we were legalising what had been done for a long time past, and done in all cases. We were mistaken in that respect with regard to the radio relay companies. When I made my statement I was making it in response to a request as to why the Clause was made to operate retrospectively. The statement that I made had relation to that position.
I do not want to be too technical, but I think I am entitled to say, on the substance of the matter, that the present Clause does not relate to the retrospective operation of the Bill. It relates to the taxation year 1950–51, which was the year which was being dealt with in last year's Finance Act. If I had not incorrectly represented the position as I did, I do not know what difference that would, or could, have made to the position.
The hon. and learned Member for Northants, South (Mr. Manningham-Buller) said it would have made a difference in that the Clause would have been further discussed. I dare say that that is the case, but after all, that debate took place during the Committee stage of the Finance Bill and the Report stage followed. Without breaking any confidences, I may say that the radio relay companies were fully aware between the Committee and Report stages that the Clause covered them. Whilst I quite agree that it takes a certain time to realise its implications—I do not hold this against anybody—nevertheless when it is said that had I not made that statement the matter would have been further discussed, it is perhaps pertinent to observe that when the Report stage of the Finance Bill was reached no Amendment was put down. I do not make much of the point, because not very long had elapsed between the two stages and it is possible that the implications of the Clause might not have been fully understood.
What is the complaint which is made? The substance of the complaint made by the radio relay companies is that they are being transferred from one system to the other. That really is not a ground

of complaint. If it was right and proper to confer the new system because it was better than the alternative system, then I do not think that on the merits the radio relay companies have any complaint at being brought into the new system.
The new Clause has been very carefully explained by the hon. and learned Member for Northants, South, and my hon. and gallant Friend the Member for Hull, Central (Captain Hewitson) has supported it. We could not accept the Clause because of what it would do. It has the effect in relation to the year 1950–51 of giving radio relay companies a double allowance—at least, that is its probable effect. There is conceivably—I say this with all respect to the Chair, who takes the view that it gives the double allowance—the other arguable view that it does not.
The view which the Chair takes is that the effect is to give a double allowance, and it does so in this way. In respect of the taxation year 1950–51 it would enable the company which has made the payment to claim, to deduct, in computing its tax liability for 1950–51—which, of course, is based on its previous year's profits—the payments which it made in the previous year. That would be giving it one species of relief in relation to these wayleave payments. It would also have the effect of enabling the company in the year 1950–51 to obtain further relief in respect of the wayleave payments that it actually makes in that year.
The effect of that, undoubtedly, is to give to the companies who make these payments a species of double exemption from tax, which cannot be justified upon any logical principle. They really get it twice over, because of the effect of the transfer from the previous system to the present system. Under the previous system, they got their relief in that they were taxed on the previous year's profits, and in computing that previous year's profits they deducted the payments they had made by way of wayleaves. Under the new system they lose that relief but they get a different relief—namely, that they are entitled to deduct from the payments they make in the actual Tax year tax on those wayleave payments, and to retain the amount of tax if they have made the wayleave payments out of taxed income. So they do not lose their relief.
6.0 p.m.
I am perfectly ready to concede that arithmetically it works out that in a given year the former system might have been more advantageous to them, but that is not a ground for complaint. That is simply saying that on an arithmetical comparison of their payments in one year as against another, the basis of the former year is in a given year more favourable to them. But the reverse may take place. Indeed, we apprehended that it would. If, and in so far as, the way-leave payments increase in the aggregate, then it is more to the advantage of the companies to be taxed, as obviously would appear to be the case, not on the basis of the preceding year but on the basis of the payments they make in the actual taxation year.
I am not breaking any confidence if I say that a great deal of discussion has taken place as to whether anything can be done to try to remove any sense of grievance which the companies may feel. It has been difficult to devise anything that would meet the case. Again, thinking it over carefully it seems to those who advise me that the only possible way in which it might be dealt with is that they might be given some kind of an option not to be included in Section 27 of the 1950 Act; that is to say, they could opt out of it.
The difficulty is that inasmuch as the payments made go to a recipient, if they opt out the tax liability of the recipient may be affected. Therefore, we feel that the only way of doing this would be to give an option jointly exercisable. Whether that would work out requires to be carefully thought about, but that is a possible way out. In this debate I would simply say that for the reason I have deployed we cannot accept the Clause because it gives a double relief. But we certainly do not regard the door as closed to further discussion with a view to trying to work out a solution on the basis of a joint option to be exempted from the Section exercisable both by the payer and the payee.
I hope the hon. and learned Gentleman and my hon. and gallant Friend will think that is a possible way of dealing with this problem. If so, we would welcome further discussion in order to see whether anything of that kind is possible. Upon the understanding that the matter will be further investigated on

those lines, I hope that the hon. and learned Gentleman may think it right to ask leave to withdraw his Clause which, in any event, has a fatal defect in it, in that it gives double relief.

Mr. Turner-Samuels: This is not an easy point, particularly for laymen, but the discussion as it has proceeded has obscured the matter still further. As I understood the complaint of the hon. and learned Member for Northants, South (Mr. Manningham-Buller), he was complaining of one thing only, namely, that an injustice is being worked by reason of the operation of Section 27 of the Finance Act, 1950, in that the advantages which payers of way-leaves would have got had that Act not been passed, they get no longer by reason of the effect of the provisions of Section 27 which in fact was passed to help them.
In other words, for the year 1949–50, had the 1950 Act not been passed, there would have been deductions which, by reason of Section 27, they are now not able to get. I understood that the hon. and learned Member for Northants, South, was saying that something ought to be done now by the Treasury to make that deduction possible and not to prejudice these payers in the way they are, in fact, being prejudiced.
Whilst the hon. and learned Member says that wayleave payers are having to pay double taxation, on the other hand, the Attorney-General now tells us that if this Clause is adopted it would mean double exemption. Whilst it may be true that if this Clause were to operate in the future it might mean double exemption, it is clear that so far as the way-leaves paid during the year 1949–50 are concerned, it does mean that these payers cannot get the deductions they would otherwise be entitled to, and that is really the case the hon. and learned Gentleman is seeking to make.
In those circumstances this matter should be looked into by the Attorney-General. It was never intended that these people should be prejudiced in that way. As I recollect, there was a clear understanding that the Act would not work in this way but was in fact intended to remove an anomaly, and inasmuch as this injustice has arisen, it is only right that the Treasury should devise some way of rectifying it.
As I understand it the area of the difficulty is as narrow as that. If that is true, there should be no difficulty about the matter, and the Treasury ought to look into it again with a view to achieving the end I have indicated.

Mr. Manningham-Buller: I am grateful to the right hon. and learned Gentleman for his frank explanation of how the Committee came to be misled a year ago today. The Attorney-General has contended that our Clause would in some instances give a double allowance. I can assure him that it was not the intention in drafting the Clause to do anything of the sort, but merely to give an allowance to avoid double taxation. If the system had been allowed to continue under which these people were operating, there would have been no question of a double allowance or double taxation.
Equally, if the system, brought into operation so far as they are concerned for the first time by the Finance Act, 1950, had been in operation since they commenced making these payments, there would be no case either of double taxation or of double allowance. The difficulty arises solely with regard to the transition and when the right hon. and learned Gentleman said he apprehended that the reverse would take place to what has taken place, I was wondering when he formed that opinion.
If I may give him one instance, a company with an expenditure of £26,000 in 1950 and in 1951 with a sum deductible under the new system of £19,000, has to pay a tax on the difference between the two figures which they would never have had to do before—

The Attorney-General: And vice versa.

Mr. Manningham-Buller: And vice versa. Perhaps one company might benefit, but we do not want to place on other companies an additional burden of taxation of no mean figure—in the case I have mentioned it would be £3,500—merely because of a change-over of a system of taxation.
The right hon. and learned Gentleman has thrown out a possibility of exempting these categories from the operation of that part of the Finance Act, 1950, by giving an option to the recipients of the payments. I welcome his attitude and

I hope that suggestion can be explored. It might be possible, on examination of the books of the companies, to go back to see what the position would be if they had adopted the present system from the time they first started making the payments and made adjustments accordingly. I am sure that if there is goodwill on the part of the Revenue in this matter a position can be reached when both double allowance and double taxation are avoided.
I welcome the reception by the right hon. and learned Gentleman of this suggestion. The only thing that remains is the time factor. One would have hoped if possible to have got this cleared up before we parted with the Finance Bill. The right hon. and learned Gentleman referred to nothing having been said last time about the Report stage. Both sides of the Committee are fairly familiar with the figures and I hope that, with goodwill on both sides, something may be done to enable us to rectify the position on the Report stage.

The Attorney-General: I am advised that there are difficulties about that which would make it impossible to do anything on Report stage. I thought that I should indicate that to the hon. and learned Gentleman.

Mr. Manningham-Buller: The right hon. and learned Gentleman has been very frank in saying that. I believe it might be possible to overcome those difficulties. If that is so, I hope that we shall endeavour to do it and then we may be able to do something on Report stage. We can examine that. In view of the attitude of the right hon. and learned Gentleman and what he has said, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(EXEMPTION FROM DEATH DUTIES OF MONEY BEQUEATHED FOR REPAIR OF PLACES OF WORSHIP.)

Any money given or bequeathed wholly for the repair or reconstruction of places of worship of any denomination shall be exempt from death duties.—[Captain Crookshank.]

Brought up, and read the First time.

Captain Crookshank: I beg to move, "That the Clause be read a Second time."
One of the most noticeable features about debates on new Clauses is their


infinite variety. This afternoon we have already discussed horse racing, officers' uniform and electricity way-leaves. I now invite the attention of the Committee to an entirely different subject which to the best of my recollection has not previously been ventilated in these debates, the problem of whether anything can be done in these very expensive days to assist in the repair and reconstruction of places of worship.
We have for some years past had on the Statute Book provisions by which property can be exempted from Estate Duty when it is given to the National Trust or other similar bodies. Clause 29 of the Bill extends the area to properties which are bequeathed to the Government, local authorities or universities, and, still further, it extends the exemption not only to the property itself but to the objects ordinarily kept at the time in the building. That is what we have done for ancient secular buildings, and today I want at least to launch the idea that something similar should be done for places of worship of all kinds.
Naturally, one thinks first of the parish churches of our country. Not only is the parochial system a very ancient one of great historical value but it is one of the things which most strikes visitors to this country. Visitors from overseas are always impressed as they drive about or travel by train or in the air by the enormous mass of churches in the towns and villages up and down the land. Indeed the converse is true; anyone going for the first time to some of the newer countries in the New World will sooner or later realise how few churches they have seen and how those they have seen are very often much more modest than the great buildings in this country.
6.15 p.m.
I really start with the thought of the parish church and its difficulties about repairs. The cost of repairs of all kinds has gone up enormously and it is very often quite outside the power of the parishioners to keep a parish church in repair. Hence we have innumerable appeals on behalf of historic buildings. I am not so foolish as to imagine that all churches in this country are either of great beauty or of great architectural value, but they are all holy places where two or three people gather together.
I do not wish to limit myself to the parish church. Indeed, I should like to see any arrangements which can be made extended to the churches and chapels of all denominations, to the cathedral churches of the Established Church and also to Nonconformist churches and chapels, whose repair problem is exactly the same, mutatis mutandis, as that of the parish church. Other denominations also have their problems. The first point I would make is that any possible arrangement should be of a universal character.
I do not seek to define anything in the Clause. I do not even insist on the words of the Clause. I recognise that the Clause would have to be redrafted by those who are more expert at doing it than we are; but I believe that the intention behind the Clause is perfectly obvious from the few simple words in which it is drafted.
I am concerned not only with repair but also with reconstruction. "Reconstruction" may not be the right word. What I have in mind is that a large number of places of worship of all kinds suffered damage during the war, and while it is true that arrangements were arrived at between all the denominations under a committee which was presided over by the present Archbishop of Canterbury and upon which all Churches were represented, and an arrangement was made as a result of that committee's deliberations with the Treasury over payments for war damage, the fact still remains that the various war damage payments for places of worship would not permit of their being reconstructed in their original form.
Those concerned may very well not desire to reconstruct churches on the same large scale but it follows naturally that—for want of a better word—"furnishings," apart from the structure, are something which have to be paid for out of money other than war damage compensation. In regard to current and future repair and reconstruction I am at the moment naturally thinking of war damage. That is a phase which will pass, but if the idea became enshrined in the Statute Book, it would cover reconstruction in future should other calamities such as fire overtake places of worship.
So far as the Church of England is concerned, I know that some ideas are being mooted of setting up a kind of National Trust. That is not the correct term, and I do not know that it has yet


reached any particularity, but there is an idea that a fund should exist to which donations could be made and from which money could be drawn to help in the repair and upkeep of ancient churches. If there were such a fund, I suppose it would be possible for gifts to it to be exempted altogether from Death Duties on the analogy of the National Trust and secular buildings.
I do not think that would quite meet the case I have in mind. What I have in mind is that there are people who, if they were able to take advantage of some such provision as is contained in the Clause, would wish to leave their money to a certain place of worship. If they left it to a fund and it could then be earmarked for a certain place, well and good, but the general result of having a large fund is that it is used for purposes which are most urgent and not necessarily for the church or chapel in which the individual concerned is interested.
The truth of the matter is that, owing to our high incidence of taxation today, it is very difficult, if not impossible, for anybody to make large benefactions out of current income for the purpose of repair or reconstruction. It seems to me that the only hope of keeping this ancient heritage of ours in good repair in future is to find some way by which encouragement can be given to those who would leave money at death.
I fancy that there are many who would like to do that if they had the opportunity and if as a result it did not cause, I will not say hardship, but inconvenience to the other beneficiaries under their will. If gifts are left out of moneys on which high Death Duties are levied, of course they do cut into what is left for other people. On the other hand, if they could be exempted altogether before starting to talk about the scale of Death Duties on the estate, it might be that certain benefactions could come along for a whole host of places of worship.
I do not know that the Chancellor or the Treasury could safely say that this would make a very great inroad into the amount collected from Death Duties. I do not foresee a sudden rush of everyone wanting to leave considerable sums of money to places of worship throughout the country. It might be a good thing if that were the case, because the repair

problem would be settled perhaps for a century or more; but I do not see that happening as a result of the adoption of such a proposal as this.
I should like to make another remark regarding the debate we had the other day on a proposed new Clause moved by my hon. Friend the Member for Burton (Mr. Colegate) arising out of the Gowers Committee's Report, when the Chancellor declined, at this stage at any rate, to accept anything on those lines, saying, as I understood it, that the Treasury would prefer to make ad hoc grants from time to time—this was for secular buildings—for particular historial buildings which mght need repair. That may be the end of the story in regard to secular buildings, but I should hesitate to suggest that that kind of claim would be suitable for places of worship.
I should be sorry if the Treasury, or anyone else, had to make a decision whether the parish church of Little So-and-so should receive a £100 lump sum to repair the lead piping, or something of that sort. I think we might be able to give quite a lot of alleviation of the extra burdens placed upon all places of worship by the high cost of repairs if we could adopt some sort of principle such as the one I am suggesting.
In the case of war damage, I think of many churches, some of which require a great deal of rebuilding—the Roman Catholic Cathedral at Southwark, the City churches, and a great number of churches in other towns and villages throughout the country which suffered war damage. Although I am the first to admit that the State is doing its share through war damage payments, in the nature of things it cannot be sufficient to put back those places of worship into anything like the condition in which they were. Nor do I think it fair to ask the general body of taxpayers to do it. I do not think a proposal of this kind for exempting from Death Duties any moneys bequeathed wholly for the repair or reconstruction of places of worship of all denominations would either cost the Treasury very much or harm any of the ordinary sound principles of taxation.
On the other hand, I am quite satisfied that it would go a long way towards helping in the difficulties of those who have the responsibility of looking after places of worship of every denomination.


It is in order to launch the idea that I move the Clause. I am quite prepared to be told that it is not properly drafted and I should not be surprised if it were refused because, after all, this is only the first time of asking.

Mr. Baker White: I wish to support my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank). I have the good fortune and great honour to represent the City of Canterbury, among other places, which contains not only Canterbury Cathedral, but one of the finest and oldest of small churches in the world. I know that the problem of maintaining these churches is a continual headache to those responsible.
At this time of the year, up to 10,000 pilgrims a day are coming to Canterbury Cathedral and I am sure that many of them who see the fine condition in which it is kept, who cannot go up and see all the troubles there are in the roof, and who do not appreciate the great cost of putting back the stained glass taken out during the war, believe that there is somewhere an ample sum of money for its maintenance. There is no such sum of money. Most of the money now has to be raised by that remarkable organisation the Friends of Canterbury Cathedral. Many sums at death come through that organisation in addition to subscriptions and gifts by living friends, for which we are also very thankful, but, as they are subject to Death Duties, those sums consequently diminish.
Only a few days ago I received an appeal for St. Martin's Church, which is not only one of the oldest places of Christian worship in this country, but I think one of the oldest places of Christian worship in the world. They want a sum of money urgently. My own parish church has recently received a small sum from an estate. If we had a little more the whole of the work that needs doing to that church could be done.
My right hon. and gallant Friend mentioned war damage. At Canterbury German bombs fell all around the Cathedral. They completely destroyed the Cathedral Library and did considerable damage, which has only just been found, to the Cathedral itself. War damage payments cannot meet all the work which needs to be done and the cost of the day-to-day maintenance of this enormous church. If

anything can be done along the lines suggested in this Clause, I am certain that anyone who is concerned with this problem of the maintenance of our places of worship will be very thankful indeed for anything the Chancellor can do.

Mr. Pickthorn: I will not take many minutes, but I hope that the Treasury Bench's withers, wherever situated, are not unwrung by the two urgent and moving speeches to which we have listened. I want to add two or three quite short sentences.
What my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) said about going, to far-distant parts and there observing the comparative poverty of ecclesiastical buildings—comparatively small numbers and so on—might be strengthened by not going very far, but going only to France. It is really very striking that, although the Reformation happened here and not there, so to speak, at least not in the same sense, how very much better, on the whole, ecclesiastical buildings have been preserved here; and that is for a series of historical reasons which do great credit to our ancestors.
It would not be in order now, nor do I wish, to discuss whether or not the State in which we now live, a State in which all capital and all income are all the time at the mercy of an omnicompetent administration and very high proportions of them are taken—unprecedentedly high proportions—I would not for a moment argue whether that is a good thing or not; but it makes almost infinitely more difficult the business of people who have the responsibility for preserving these things. As one who has, with a few others, responsibility for one 14th Century building, I may say that it is no use saying that with good management they would be kept up-to-date, even leaving aside war damage and the rest.
6.30 p.m.
I know well what happens when one goes to the best architects and experts. One is told, "You must spend £8,000 and you will be safe for another 200 years." The £8,000 is spent, and, sometimes after an almost farcically short interval, the same again is required. In the case I am thinking of at the moment, £10,000 is required. The State and the Treasury, the revenue-collecting part of


the State, are in an entirely different relation to this problem from what they ever have been before; and I cannot believe that the best answer is that each case should be put up on its merit before the Treasury or some advisory committee or anything of that kind. Here I think is a better way than that, clearly. At the very least, something of this sort ought to be considered. If not, we may at any rate turn on the Treasury Bench what they are so fond of saying to us and say, "What would you do, chum?"
I think really that if they do not think this is one of the best ways of alleviating a very heavy burden which ought not to fall on those bearing it, if they cannot think that this is one way, then they ought to inform the Committee that they have hopes of discovering other and better ways, and very speedily.

Mr. Gaitskell: In moving this new Clause, the right hon. and gallant Gentleman mentioned the extraordinary variety of topics we are discussing this afternoon and have been discussing for the last two or three days. There is, of course, a very simple explanation for that. The Committee stage of the Finance Bill is an occasion when hon. Members put forward various propositions on behalf of various sections of the community, either in relation to the taxes they pay, or in relation to certain other hardships from which they suffer. This is a case in point.
I imagine that a great many hon. Members, perhaps all of us, have had appeals, and have no doubt responded to them, to assist in the restoration and repair of local parish churches. Nobody for one moment would dispute that the object of those appeals is a very worthy one; but I think there are serious difficulties about this particular proposition which I would like to explain to the Committee.
It is obvious that the benefit of the exemption from Estate Duty here proposed would in the first instance go to the estate. The purpose of proposing it is that, because of that benefit, more people would be likely to leave money for this particular purpose. I do not dispute that. It may be so, but in passing I would mention that since this is a charitable object it does have the benefit of the one-year provision as regards gifts

inter vivos; any money given more than a year before the death of a person concerned would not be subject to Estate Duty at all, and so that makes some difference.
I do not think it easy for us to single out the repair and reconstruction of churches as a particular charitable object. There are many other worthy causes, and I do not see how one can draw the line. I realise that the right hon. and gallant Gentleman and other hon. Members may have special feelings about this. I have no doubt that other hon. Members would claim that money left for educational or other charitable purposes was equally worthy. It would be very difficult for me to resist that argument and to say that I thought there was something special about the reconstruction of churches which did not apply in other cases.
The right hon. and gallant Gentleman referred to the matter we discussed the other day on another new Clause, that is, the special arrangements made in connection with historic houses. I think he would agree that there is probably no very perfect analogy there. In the first place, one of the great difficulties about historic houses was the taxation from which the owners were suffering in respect of those houses, the payments they had to make under Schedule A and the Estate Duties which had to be paid. That naturally does not apply in the case of churches, on which no taxes are paid.
In the second place, as the right hon. and gallant Gentleman pointed out, it would be invidious, to say the least of it—he was not proposing it, and the hon. Member for Carlton (Mr. Pickthorn) took the same line—for the Treasury to select individual churches and to say, "We think this one worthy of preservation and we will help it, but we will not help that one." In the case of historic houses we do say that we will select. That was also involved in the recommendations of the Gowers Committee. I think, therefore, that we cannot really draw an analogy of the kind suggested.
Though we all, I think, would agree that at any rate a large number of churches are also historic treasures and buildings of great importance to the community, nevertheless, there are those who attend such places of worship who would normally themselves accept the responsibility for preserving and looking after


them. We have to be very careful not to put on to the general taxpayer the responsibility which, as I say, those in that position would naturally assume; and I do not believe that they would wish that to be the case. It is difficult to avoid the conclusion that that is what would be happening if we granted an exemption from Estate Duty.
It may be said that it is not very much, that it will not cost the Revenue a great deal, but the fact remains that we are reducing the Revenue accordingly, and that is a point which would have to be explained to the taxpayer. I appreciate the purpose of the right hon. and gallant Gentleman in raising this matter. We all feel that this is a worthy cause and I am prepared, where there is evidence of serious difficulty, to see whether there is any way in which we would be justified, as a community, and as the Government representing the community, in doing something to help.
Naturally, I cannot be held to make any promises here. I would say only that I will look into the matter and see how much evidence there is of serious decay, and of churches falling to pieces which ought not to be allowed to go to pieces, and see if there is anything which can be done.

Mr. Brendan Bracken: Surely the right hon. Gentleman has seen the statement made by the Pilgrim Trust which has given such great help to historic churches, that now the number of repairs is so great as to be beyond their means? The right hon. Gentleman must surely know, when he talks of the generosity of parishioners, that some of the most attractive churches in England are now closed because the livings have been amalgamated. This is a very urgent problem and something the Treasury really ought to attend to. I know that the right hon. Gentleman feels about these matters. I think he should re-read the Pilgrims Trust Report, and then he would not be so hard-hearted.

Mr. Gaitskell: I do not think the right hon. Gentleman is quite fair in describing my speech as that of a hard-hearted person. The Chancellor of the Exchequer very often has to be hard-hearted, but I do not think that this afternoon I am showing any particular signs of hardness.

We really need to be clear about our purpose in taking any action of this kind. The argument of the right hon. and gallant Gentleman was not directed to the historic or artistic value of the buildings. It is one thing to show concern with that aspect of it and I can look at it, but it is another to ask for assistance on a much wider scale for a particular charity; and I am bound to say that the latter seems to present very great difficulty.

Mr. Hopkin Morris: While I recognise that the Chancellor is prepared to look at this question again, I do not think that the reason he gave is adequate. The new Clause deals with places of worship of all denominations. The argument of the hon. Member for Carlton (Mr. Pickthorn) seemed to me to be conclusive. When the State is extending its power and everybody comes within the scope of the State, then all the voluntary bodies that are left without the State, especially bodies of this sort, should be aided as far as possible or they should come within the sphere of exemption and remain voluntary bodies.
I make a strong appeal to the Chancellor to consider, not the narrow aspect of keeping historic buildings, but the question of exempting from State action all places of worship.

Mr. David Renton: In my constituency there are about 50 small beautiful churches scattered about the countryside. In making a plea for these churches, I will attempt to answer some of the arguments advanced by the Chancellor. They are mainly churches of the 13th and 14th centuries which are famous all the world over for their beautiful spires.
The Chancellor mentioned that the need of such places will be met to some extent by gifts inter vivos. I suggest that that argument misses the point. The point is that these churches, especially the small village churches, were mostly founded by private benefaction and they had to be maintained by private benefaction through the ages. Private benefaction now finds itself not so well able to meet the obligations as it was formerly. Therefore, private benefactors, with the best will in the world, are not likely to be able to afford to take advantage of the rule whereby gifts inter vivos will be exempt


from duty for one year. It must be a question of legacy duty if the churches are to benefit.
With regard to the argument that the people who worship in the churches should be the people to help the church, I am afraid that that will not save our churches. It may be a lamentable fact, but it will not save our churches. I have no hesitation in saying that this is a charge which ought to fall on the whole of the community. I say that for several reasons.
Apart from the regular worshippers, nearly every member of the community at some time in his or her life enters either a church or a chapel. In addition to the churches in my constituency, which is the home of non-conformity, there are a great many ancient chapels some of which are of historical significance. Apart from the regular worshippers, everyone at some time or another will require to use a church or chapel. Surely everyone should take pride in bearing responsibility for preserving these ancient, historical and aesthetically beautiful buildings which are part of our national heritage.
In the village in which I live, where there are about 200 people, we have a very old church. For about 10 years we have been about £400 in debt on our repairs bill. We have just been advised that in order to save the church tower from falling down we must spend another £1,200.

The Deputy-Chairman: Are we not going rather beyond the exemption from Death Duties of money bequeathed for the repair of places of worship?

Mr. Renton: The right hon. Gentleman asked for some evidence on which he could base his decision. I was trying to give evidence.

The Deputy-Chairman: I did not understand him to ask for it to be given in this Committee.

Mr. Renton: I will cut my remarks short by saying that what is typical of our village church is typical of many other churches in my constituency. There is a heavy bill to meet and if we in our generation do not do something about the matter, future generations will greatly resent our folly.

6.45 p.m.

Viscount Hinchingbrooke: I consider it to be rather strange that the right hon. Gentleman should in this Finance Bill be making active preparations to maintain houses of historic importance, albeit they are architecturally of extreme value, and have been so slow to appreciate the needs of the churches. Not only has my right hon. and gallant Friend's Clause been on the Order Paper for some time—and the Chancellor has failed to examine it adequately enough to be able to bring forward a more concrete and agreeable reply—but there have been reports by the churches over the last five years about the state of deterioration of these noble buildings all over the country.
I find it strange that a Socialist Government who profess themselves to be a highly Christian set of ladies and gentlemen should have failed to take into account the increasing dilapidations, the wear and tear, the fact that so many of these churches are falling into disrepair, that their doors are locked and people are unable to get into them, and other considerations.
When my right hon. Friend brings forward a Clause and the churches themselves have written in their reports that something should be done, and the Chancellor fails to take account of it but instead brings forward legislation to provide for the maintenance of historic homes, I think his action is entirely disproportionate. I can only urge on the right hon. Gentleman that he should give far more active consideration to this problem now that it has been raised and be prepared, if necessary, to say something on the Report stage in a more friendly way.

Colonel Crosthwaite - Eyre: The Chancellor made a case which does not bear examination. He mentioned various factors and, as usual, knocked down bogeys which were not put up. My right hon. Friend made it clear that among other considerations was the question of reconstruction. We call ourselves a Christian country. We are the only country in Europe which has given no facilities for the reconstruction of churches after bomb damage. Wherever one goes abroad one sees churches being re-established and reconstructed. We are the only people who are not doing that.
If we pride ourselves on being a Christian country, now is the time, under this Clause, to make some small concession to enable this work to be carried out. The concession could not cost the Treasury very much, but it would give some value to the many pledges which the Front Bench opposite are apt to make showing their adherence to the principle of promoting Christian worship. I ask the right hon. Gentleman to reconsider the matter and to show that the Government recognise the value of places of religion by granting this concession as a means of ensuring our national heritage.

Captain Crookshank: I was very disappointed at the reply which the right hon. Gentleman gave to what I thought was a very modest proposal which was entirely sui generis—it could not possibly be confused with anything else—but the right hon. Gentleman said that if he opened this door it would open the question of all sorts of other charges. He said that if he did this, others would want similar concessions about education. That may be so, but surely the whole point which we are debating concerns places of worship. I am not persuaded, and I do not think that any other hon. Member is, that questions of worship are analogous to questions of other kinds.
It is true to say that we have been very laggard in this country in facilitating the repair and reconstruction of all places of worship. I repeat that I spoke particularly of the parish churches, because they

happen to be the oldest, and therefore suffer the most from decay through the effluxion of time. I am not limiting myself to that case, however; I am on a very much broader issue, covering all places of worship, whether cathedrals, churches, chapels, conventicles and anything which might come within the definition of a place of worship, and which should be able, through the charity of bequests made by people who have died, to get some relief in their high costs.

The right hon. Gentleman reminded us that this sort of gift comes within the inter vivos relief of one year. If a person makes the bequest and lives for a year after, the money does not have to pay Estate Duty by aggregation. That is quite true, and I knew that when I made the proposal, but that is quite a different matter. It is just human nature that many people will leave something when they die, though they are quite reluctant to make that gift during their lifetime. In fact, they may not be able to do so, because they would require the income from the capital which they wish to give away in order to live upon it. I think the Chancellor has held out no hope at all to those of us who have spoken on this matter, and, in my disappointment I shall certainly go into the Lobby in protest against his decision.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 278: Noes, 287.

Division No. 142.]
AYES
[6.52 p.m.


Aitken, W. T.
Braithwaite, Lt.-Cmdr. Gurney
Darling, Sir William (Edinburgh, S.)


Alport, C. J. M.
Bromley-Davenport, Lt.-Col. W
Davidson, Viscountess


Amery, Julian (Preston, N.)
Browne, Jack (Govan)
Davies, Rt. Hn. Clement (Montgomery)


Amory, Heathcoat (Tiverton)
Buchan-Hepburn, P. G. T.
Davies, Nigel (Epping)


Arbuthnot, John
Bullus, Wing Commander E. E.
de Chair, Somerset


Ashton, H. (Chelmsford)
Burden, Squadron Leader F A.
De la Bere, R.


Assheton, Rt. Hon. R. (Blackburn, W.)
Butcher, H. W.
Deedes, W. F.


Astor, Hon. M. L.
Butler, Rt. Hn. R. A. (Saffron Walden)
Digby, S. W.


Baker, P. A. D.
Carr, Robert (Mitcham)
Donner, P. W.


Baldock, Lt.-Cmdr. J. M
Carson, Hon. E.
Drayson, G. B


Baldwin, A. E.
Channon, H.
Drewe, C.


Banks, Col. C.
Churchill, Rt Hon. W. S.
Dugdale, Maj. Sir Thomas (Richmond)


Beamish, Major Tufton
Clarke, Col. Ralph (East Grinstead)
Duncan, Capt. J. A. L.


Bennett, Sir Peter (Edgbaston)
Clarke, Brig Terence (Portsmouth, W.)
Dunglass, Lord


Bennett, Dr. Reginald (Gosport)
Clyde, J. L.
Duthie, W. S.


Bennett, William (Woodside)
Colegate, A.
Eccles, D. M.


Bevins, J. R. (Liverpool, Toxteth)
Conant, Maj. R. J. E.
Eden, Rt. Hon. A.


Birch, Nigel
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Erroll, F. J.


Bishop, F.
Cooper-Key, E. M.
Fisher, Nigel


Black, C. W.
Corbett, Lt.-Col. Uvedale (Ludlow)
Fletcher, Walter (Bury)


Boles, Lt.-Col. D. C (Wells)
Craddock, Beresford (Speithorne)
Fort, R.


Boothby, R.
Cranborne, Viscount
Foster, John


Bossom, A. C.
Crookshank, Capt. Rt. Hon. H. F. C
Fraser, Hon. Hugh (Stone)


Boyd-Carpenter, J. A
Crosthwaite-Eyre, Col. O. E.
Fraser, Sir I. (Morecambe &amp; Lonsdale)


Boyle, Sir Edward
Crowder, Capt. John (Finchley)
Fyfe, Rt. Hon. Sir David Maxwell


Bracken, Rt. Hon. B
Crowder, Petre (Ruislip—Northwood)
Gage, C. H.


Braine, B. R.
Cundiff, F. W.
Galbraith, Cmdr. T. D (Pollok)


Braithwaite, Sir Albert (Harrow. W)
Cuthbert. W N
Gammans, L. D




Garner-Evans, E. H. (Denbigh)
Lucas-Tooth, Sir Hugh
Robson-Brown, W.


Gates, Maj. E. E.
Lyttelton, Rt. Hon. O.
Rodgers, John (Sevenoaks)


Glyn, Sir Ralph
McAdden, S. J.
Roper, Sir Harold


Gomme-Duncan, Col. A
McCorquodale, Rt. Hon. M. S.
Ropner, Col L


Granville, Edgar (Eye)
Macdonald, A. J. F. (Roxburgh)
Russell, R. S.


Gridley, Sir Arnold
Macdonald, Sir Peter (I. of Wight)
Salter, Rt. Hon. Sir Arthur


Grimond, J.
Mackeson, Brig. H. R.
Sandys, Rt. Hon. D


Grimston, Hon. John (St. Albans)
McKibbin, A.
Savory, Prof. D. L


Grimston, Robert (Westbury)
McKie, J. H. (Galloway)
Scott, Donald


Harris, Frederic (Croydon, N.)
Maclay, Hon. John
Shepherd, William


Harris, Reader (Heston)
Maclean, Fitzroy
Smiles, Lt.-Col. Sir Walter


Harvey, Ian (Harrow, E.)
MacLeod, Iain (Enfield, W.)
Smithers, Peter (Winchester)


Harvie-Watt, Sir George
MacLeod, John (Ross and Cromarty)
Smithers, Sir Waldron (Orpington)


Hay, John
Macmillan, Rt. Hon. Harold (Bromley)
Smyth, Brig. J. G. (Norwood)


Head, Brig. A. H.
Macpherson, Major Niall (Dumfries)
Soames, Capt. C.


Headlam, Lt.-Col. Rt. Hon. Sir C.
Maitland, Cmdr. J. W.
Spearman, A. C. M


Heald, Lionel
Manningham-Buller, R. E.
Spens, Sir Patrick (Kensington, S.)


Heath, Edward
Marlowe, A. A. H.
Stanley, Capt. Hon. Richard (N. Fylde)


Henderson, John (Cathcart)
Marples, A. E.
Stevens, G. P.


Hicks-Beach, Maj. W. W.
Marshall, Douglas (Bodmin)
Steward, W. A. (Woolwich, W.)


Higgs, J. M. C.
Marshall, Sidney (Sutton)
Stewart, Henderson (Fife, E.)


Hill, Dr. Charles (Luton)
Maude, Angus (Ealing, S.)
Stoddart-Scott, Col. M.


Hill, Mrs. E. (Wythenshawe)
Maude, John (Exeter)
Storey, S.


Hinchingbrooke, Viscount
Maudling R.
Strauss, Henry (Norwich, S.)


Hirst, Geoffrey
Medlicott, Brig. F.
Stuart, Rt. Hon. James (Moray)


Hollis, M. C.
Mellor, Sir John
Summers, G. S.


Holmes, Sir Stanley (Harwich)
Molson, A. H. E.
Sutcliffe, H.


Hope, Lord John
Monckton, Sir Walter
Taylor, Charles (Eastbourne)


Hornsby-Smith, Miss P.
Moore, Lt.-Col., Sir Thomas
Taylor, William (Bradford, N.)


Horsbrugh, Rt. Hon. Florence
Morris, Hopkin (Carmarthen)
Teeling, W.


Howard, Gerald (Cambridgeshire)
Morrison, John (Salisbury)
Teevan, T. L.


Howard, Greville (St. Ives)
Morrison, Rt. Hon. W. S. (Cirencester)
Thomas, J. P. L. (Hereford)


Hudson, Sir Austin (Lewisham, N,)
Mott-Radclyffe, C. E.
Thompson, Kenneth Pugh (Walton)


Hudson, Rt. Hon. Robert (Southport)
Nabarro, G.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Hudson, W. R. A. (Hull, N.)
Nicholls, Harmar
Thorneycroft, Peter (Monmouth)


Hulbert, Wing Cmdr. N. J.
Nicholson, G.
Thornton-Kemsley, Col. C. N


Hurd, A. R.
Nield, Basil (Chester)
Thorp, Brig. R. A. F.


Hutchinson, Geoffrey (Ilford, N.)
Noble, Cmdr. A. H. P.
Tilney, John


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Nugent, G. R. H.
Touche, G. C.


Hutchison, Colonel James
Nutting, Anthony
Turner, H. F. L.


Hyde, H. M.
Oakshott, H. D.
Turton, R. H.


Hylton-Foster, H. B.
Odey, G. W.
Vane, W. M. F.


Jeffreys, General Sir George
O'Neill, Rt. Hon. Sir Hugh
Vaughan-Morgan, J. K.


Jennings, R.
Ormsby-Gore, Hon. W. D.
Vosper, D. F.


Johnson, Major Howard (Kemptown)
Orr, Capt. L. P. S.
Wade, D. W.


Jones, A. (Hall Green)
Orr-Ewing, Charles Ian (Hendon, N.)
Wakefield, Edward (Derbyshire, W.)


Joynson-Hicks, Hon. L. W.
Orr-Ewing, Ian L. (Weston-super-Mare)
Wakefield, Sir Wavell (Marylebone)


Kaberry, D.
Osborne, C.
Walker-Smith, D. C.


Kerr, H. W. (Cambridge)
Peake, Rt. Hon. O.
Ward, Hon. George (Worcester)


Lambert, Hon. G.
Perkins, W. R. D.
Ward, Miss I. (Tynemouth)


Lancaster, Col. C. G
Peto, Brig. C. H. M.
Waterhouse, Capt. Rt. Hon. C


Langford-Holt, J.
Pickthorn, K.
Watkinson, H.


Law, Rt. Hon. R. K.
Pitman, I. J.
Webbe, Sir Harold


Legge-Bourke, Maj. E. A. H
Powell, J. Enoch
Wheatley, Major M. J. (Poole)


Lennox-Boyd, A. T.
Price, Henry (Lewisham, W.)
White, Baker (Canterbury)


Lindsay, Martin
Prior-Palmer, Brig. O.
Williams, Charles (Torquay)


Linstead, H. N.
Profumo, J. D.
Williams, Gerald (Tonbridge)


Llewellyn, D.
Raikes, H. V.
Williams, Sir Herbert (Croydon, E.)


Lloyd, Rt. Hn. Geoffrey (King's Norton)
Rayner, Brig. R.
Wills, G.


Lloyd, Maj. Guy (Renfrew, E.)
Redmayne, M.
Wilson, Geoffrey (Truro)


Lloyd, Selwyn (Wirral)
Remnant, Hon. P.
Winterton, Rt. Hon. Earl


Lockwood, Lt.-Col. J. C.
Renton, D. L. M.
Wood, Hon. R.



Roberts, Emrys (Merioneth)
York, C.


Longden, Gilbert (Herts, S.W)
Roberts, Major Peter (Heeley)



Low, A. R. W.
Robertson, Sir David (Caithness)
TELLERS FOR THE AYES.


Lucas, P. B. (Brentford)
Robinson, Roland (Blackpool, S.)
Mr. Studholme and




Mr. T. G. D. Galbraith.




NOES


Acland, Sir Richard
Benn, Wedgwood
Broughton, Dr. A. D. D


Adams, H. R.
Benson, G.
Brown, George (Belper)


Albu, A. H.
Beswick, F.
Brown, Thomas (Ince)


Allen, Arthur (Bosworth)
Bevan, Rt. Hon. A. (Ebbw Vale)
Burke, W. A.


Allen, Scholefield (Crewe)
Bing, G. H. C.
Burton, Miss E


Anderson, Alexander (Motherwell)
Blenkinsop, A.
Butler, Herbert (Hackney, S)


Anderson, Frank (Whitehaven)
Blyton, W. R.
Carmichael, J.


Awbery, S. S.
Boardman, H.
Castle, Mrs. B. A


Ayles, W. H.
Booth, A.
Champion, A. J.


Bacon, Miss Alice
Bottomley, A. G
Chetwynd, G. R


Baird, J.
Bowden, H. W.
Clunie, J.


Balfour, A.
Bowles, F. G. (Nuneaton)
Cocks, F. S


Barnes, Rt. Hon. A. J.
Braddock, Mrs. Elizabeth
Coldrick, W.


Bartley, P
Brook, Dryden (Halifax)
Collick, P.


Bellenger, Rt. Hon. F. J
Brooks, T. J. (Normanton)
Collindridge, F




Cook. T. F.
Jeger, George (Goole)
Pursey, Cmdr. H.


Cove, W. G.
Jeger, Dr. Santo (St Pancras, S.)
Rankin, J.


Craddock, George (Bradford, S.)
Jenkins, R. H.
Rees, Mrs. D.


Crawley, A.
Johnson, James (Rugby)
Reeves, J.


Crosland, C. A. R.
Johnston, Douglas (Paisley)
Reid, William (Camlachie)


Crossman, R. H. S
Jones, David (Hartlepool)
Richards, R.


Cullen, Mrs. A.
Jones, Frederick Elwyn (West Ham, S.)
Roberts, Goronwy (Caernarvonshire)


Daines, P.
Jones, Jack (Rotherham)
Robertson, J. J. (Berwick)


Dalton, Rt. Hon. H.
Jones, William Elwyn (Conway)
Robinson, Kenneth (St. Pancras, N.)


Darling, George (Hillsborough)
Keenan, W.
Rogers, George (Kensington, N.)


Davies, A. Edward (Stoke, N.)
Kenyon, C.
Ross, William (Kilmarnock)


Davies, Harold (Leek)
Key, Rt. Hon. C. W
Royle, C.


Davies, Stephen (Merthyr)
King, Dr. H. M.
Shackleton, E. A. A


de Freitas, Geoffrey
Kinghorn, Sqn. Ldr. E.
Shawcross, Rt. Hon. Sir Hartley


Deer, G.
Kinley, J.
Shinwell, Rt. Hon. E.


Delargy, H. J.
Kirkwood, Rt. Hon. D.
Shurmer, P. L. E.


Diamond J.
Lang, Gordon
Silverman, Julius (Erdington)


Dodds, N. N.
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Donnelly, D.
Lee, Miss Jennie (Cannock)
Simmons, C. J


Driberg, T. E. N
Lever, Leslie (Ardwick)
Slater, J.


Dugdale, Rt. Hon. John (W. Bromwich)
Lewis, Arthur (West Ham, N.)
Smith, Ellis (Stoke, S.)


Dye, S.
Lewis, John (Bolton, W.)
Smith, Norman (Nottingham, S.)


Ede, Rt. Hon. J. C.
Lindgren, G. S.
Snow, J. W.


Edelman, M.
Lipton, Lt.-Col. M.
Sorensen, R. W.


Edwards, John (Brighouse)
Logan, D. G.
Soskiee, Rt. Hon. Sir Frank


Edwards, Rt. Hon. Ness (Caerphilly)
Longden, Fred (Small Heath)
Sparks, J. A


Edwards, W. J. (Stepney)
McAllister, G.
Steele, T.


Evans, Albert (Islington, S.W.)
MacColl, J. E.
Stewart, Michael (Fulham, E.)


Evans, Edward (Lowestoft)
McGhee, H. G.
Stokes, Rt. Hon. R. R.


Evans, Stanley (Wednesbury)
McGovern, J.
Strachey, Rt. Hon. J.


Ewart, R.
McInnes, J.
Strauss, Rt. Hon. George (Vauxhall)


Fernyhough, E.
Mack, J. D.
Stross, Dr. Barnett


Field, Capt. W. J.
McKay, John (Wallsend)
Summerskill, Rt. Hon. Edith


Finch, H. J.
Mackay, R. W. G. (Reading, N.)
Sylvester, G. O.


Fletcher, Eric (Islington, E.)
McLeavy, F.
Taylor, Bernard (Mansfield)


Follick, M.
MacMillan Malcolm (Western Isles)
Taylor, Robert (Morpeth)


Foot, M. M.
McNeil, Rt. Hon. H.
Thomas, David (Aberdare)


Forman, J. C.
MacPherson, Malcolm (Stirling)
Thomas, George (Cardiff)


Fraser, Thomas (Hamilton)
Mainwaring, W. H.
Thomas, Iorwerth (Rhondda, W.)


Freeman, John (Watford)
Mallalleu, E. L. (Brigg)
Thomas, Ivor Owen (Wrekin)


Gaitskell, Rt. Hon. H. T. N
Mallalieu, J. P. W. (Huddersfield, E.)
Thorneycroft, Harry (Clayton)


Ganley, Mrs. C. S
Mann, Mrs. Jean
Thurtle, Ernest


Gibson, C. W.
Manuel, A. C.
Timmons, J.


Gilzean, A.
Marquand, Rt. Hon. H. A.
Tomney, F.


Gooch, E. G.
Mathers, Rt. Hon. G.
Turner-Samuels, M.


Gordon-Walker, Rt. Hon. P. C.
Mayhew, C. P
Ungoed-Thomas, A. L


Greenwood, Anthony (Rossendale)
Mellish, R. J.
Usborne, H.


Greenwood, Rt. Hon Arthur (Wakefield)
Messer, F.
Vernon, W. F.


Grenfell, D. R.
Middleton, Mrs. L.
Viant, S. P.


Grey, C. F.
Mikardo, Ian
Wallace, H. W.


Griffiths, David (Rother Valley)
Moeran, E. W.
Watkins, T. E.


Griffiths, Rt. Hon James (Llaneffy)
Monslow, W.
Webb, Rt. Hon. M. (Bradford, C.)


Gunter, R. J.
Moody, A. S.
Weitzman, D.


Haire, John E. (Wycombe)
Morgan, Dr. H. B.
Wells, Percy (Faversham)


Hale, Joseph (Rochdale)
Morley, R.
Wells, William (Walsall)


Hale, Leslie (Oldham, W.)
Morris, Percy (Swansea, W.)
West, D. G.


Hall, Rt. Hon. Glenvil (Colne Valley)
Mort, D. L.
Wheatley, Rt. Hon. J. (Edinb'gh, E.)


Hall, John (Gateshead, W.)
Moyle, A.
White, Mrs. Eirene (E. Flint)


Hamilton, W. W
Mulley, F. W.
White, Henry (Derbyshire, N. E.)


Hardy, E. A.
Murray, J. O.
Whiteley, Rt. Hon. W


Hargreaves, A.
Nally, W.
Wigg, G.


Hastings, S.
Neal, Harold (Bolsover)
Wilcock, Group Capt. C. A. B


Hayman, F. H.
Neal-Baker, Rt. Hon. P. D
Wilkes, L.


Henderson, Rt. Hon. Arthur (Tipton)
O'Brien, T.
Willey, Frederick (Sunderland)


Herbison, Miss M.
Oldfield, W. H.
Willey, Octavius (Cleveland)


Hewitson, Capt. M.
Oliver, G. H.
Williams, David (Neath)


Hobson, C. R.
Orbach, M.
Williams, Rev. Llywelyn (Abertillery)


Holman, P.
Padley, W. E.
Williams, Ronald (Wigan)


Holmes, Horace (Hemsworth)
Paget, R. T.
Williams, Rt. Hon. Thomas (Don V'lly)


Houghton, D.
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Williams, W. T. (Hammersmith, S.)


Hoy, J.
Paling, Will T. (Dewsbury)
Wilson, Rt. Hon. Harold (Huyton)


Hudson, James (Ealing, N.)
Pannell, T. G.
Winterbottom, Ian (Nottingham, C)


Hughes, Emrys (S. Ayrshire)
Parker, J.
Wise, F. J.


Hughes, Hector (Aberdeen, N)
Paton, J.
Woodburn, Rt. Hon. A


Hughes, Moelwyn (Islington, N)
Pearson, A.
Woods, Rev. G. S.


Hynd, H. (Accrington)
Peart, T. F.
Wyatt, W. L.


Hynd, J. B. (Attercliffe)
Poole, C.
Yates, V. F.


Irvine, A. J. (Edge Hill)
Popplewell, E.
Younger, Hon. K.


Irving, W. J. (Wood Green)
Porter, G.



Isaacs, Rt. Hon. G. A.
Price, Philips (Gloucestershire, W.)
TELLERS FOR THE NOES:


Janner, B.
Procter, W. T.
Mr. Hannan and Mr. Wilkins.


Jay, D. P. T
Pryde, D. J

New Clause.—(DEPLETION ALLOWANCE FOR MINES AND OIL WELLS.)

(1) Where on or after the sixth day of April, nineteen hundred and fifty-one, a person carries on a trade which consists of or includes the working of a mine, oil well or other source of mineral deposits of a wasting nature there shall be made to him in each basis period an allowance in respect of the depletion of such property.

(2) The allowance to be made shall he an amount equivalent to fifteen per cent. of the gross income from the property in each basis period.

(3) For the purpose of this section "gross income" means the proceeds receivable from the mineral deposits when extracted and from the ordinary treatment processes normally applied to obtain the commercially marketable mineral product or products.

(4) For the purpose of the preceding subsection "ordinary treatment processes" shall include crushing, grinding, concentration and similar processes, but shall exclude smelting and refining.—[Mr. H. Fraser.]

Brought up, and read the First time.

7.0 p.m.

Mr. Hugh Fraser: I beg to move, "That the Clause be read a Second time."
The object of this Clause is to encourage the production of more raw materials, such as oil, tin, copper, zinc, and all the other essentials we need by companies registered in this country. I think the Committee is well aware of the present shortages. We are only too well aware of the temporary and local shortages which exist owing to re-armament, and hon. Members of all sides of the Committee are also aware of the longer term shortages which either exist now or which will shortly exist in the raw materials which are rapidly becoming near precious metals.
One of the troubles is that this country is fast dropping behind in the development of new fields. All the raw materials, such as non-ferrous metals and fuel such as oil and coal, which we use come from fields which were largely depleted before the 1914 war. Therefore, it is perfectly clear that unless a great new boost is given to the production of these raw materials throughout the Commonwealth, and, indeed, in this country and in the Colonial Empire, there is a considerable likelihood that we shall be left far behind in the race.
It is already quite clear that we are being forced to buy from the United

States and other dollar areas raw materials which should be available to us within our own territories and possessions. The Government Front Bench is doubtless well aware that last year alone some 150 million dollars had to be expended on raw materials which could possibly have been obtained within our own area of control. Further, I am sure that hon. Members on all sides realise that should anything go wrong with our Persian oil agreement we shall immediately be faced with an added dollar bill of some 400 million dollars a year in order to replace that oil.
The raw materials situation cannot be exaggerated, and the Clause seeks to give proper encouragement to those engaged in the discovery, mining and production of this great variety of raw materials by bringing taxation in this country into line with world practice. Hon. Members who are knowledgeable about mining matters or about mining taxation know that this is a matter of considerable complexity. In 1945, and again in 1949, some advantages were given to British companies mining overseas or in this country. But those advantages by no means mean that this country is in line with world practice.
What this Clause sets out to do, quite simply, is to change the present basis of depreciation of capital employed in a concern to one of allowing a depletion allowance in respect of matter extracted from the mine or oil well so that the company or persons concerned will have liquid funds available with which to carry out further exploration. That may seem to hon. Members opposite something of a revolutionary move. There are theoretical arguments against granting at this time such new allowances, and there is perhaps the obvious Socialist argument that oil and mineral shares on the Stock Exchange are having a boom.
There is also the question of equity as between the various types of industrial companies and the mineral exploiting or oil seeking types of companies. But there are also theoretical arguments in favour of this Clause. I shall not weary the Committee with such arguments, but will rather turn to the overriding necessity of seeing that this country is adequately supplied with these scarce raw materials, and, at the same time, of seeing that we view the problem which faces


us today, not merely as it was once put of having to export or die, but with the necessity of either importing raw materials or perishing.
This Clause requests the Government to give preference to persons engaged in these various industries so as to bring their advantages in the world into line with those offered to other companies, notably American, Canadian, Swiss and companies of other nationalities who are trying to exploit the world's mineral deposits. It suggests that there should be a 15 per cent. depletion allowance, which is something far less than is given at the moment to Canadian and American companies competing in the world market.
As the Attorney-General doubtless knows, 20 per cent. depletion allowance is given on certain strategic raw materials extracted in Australia. In new mines in Canada, whether they be mining the more difficult raw materials like cobalt or nickel or the more common materials like bauxite or iron ore, once a certain tonnage has been mined the mine is free of any form of Income Tax or taxation over three years of its life. After that period it is allowed 33 per cent. depletion allowance on the profit it makes.
If it be a gold mining company it is allowed a 40 per cent. depletion allowance on the gold it extracts. In the U.S.A. a 15 per cent. depletion allowance is permitted on all minerals, with 23 per cent. on sulphur, and 27 per cent. is permitted on oil. I am glad to see the Attorney-General is now checking his figures on this subject. There is also a 5 per cent. depletion allowance on coal.
This, of course, gives an immense advantage to some of these American and Canadian companies. We know that in this country the Government are now aware of the difficulties of procuring and finding these raw materials. We know that the ex-Minister of Works has just been allowed to graduate through the Fun Fair to become Minister responsible for raw materials. But unless the Government deals with the basic question of producing raw materials and giving encouragement to their production it merely becomes a matter of having a Minister whose chief job is asking the boss rather than the brother to spare a dime. If that is to be the case, it would be better to employ a film star in that

capacity. At least his face would be well known in the United States.
The Committee is faced by the danger that unless action is taken now we shall find ourselves with raw material deposits that are becoming exhausted and the companies without the funds to carry out the necessary exploration. The basic problem of all mining and drilling, whether for oil, lead, molybdenum, sand or gravel, whether on a world basis or on a company basis, is not the working of established deposits but the discovery of new deposits which can be worked.
Mining means risk and it means plenty of risk capital. No one is prepared to undertake these risks unless two conditions can be fulfilled—a good return for the risk capital involved and the possibility of a continuation of development of new mining or oil wells. That is precisely what the present British level of taxation does not permit. It allows for no expenses proper to exploration. The whole basis of successful mining or oil-seeking ventures is continuous exploration. Under the present system of taxation there is no surplus capital available for that purpose.
The Millard Tucker Report has commented on this and has pointed out the absurdity, under the present ingenious and complex tax arrangement, of limiting the field of operation which can be written off to the field where the initial development was made. That means to say that a company searching for zinc in Australia is not able to write off its exploration expenses unless its operations are undertaken in the same field, that is, in Australia. If it searches for zinc in Northern Ireland, as American companies are now searching for minerals there, it is not allowed to write off its expenses.
As hon. Members are aware, oil has been discovered in an area of some score and more miles under the sea in the Gulf of Mexico. The actual expenditure undertaken to date by American oil companies on that exploration and discovery alone is 240 million dollars and the return so far has been a mere six million dollars. We have to face the fact that there is grave danger that there is no risk capital flowing into British mining or oil boring to the extent to which it should be flowing. If one looks at short-term speculation on the Stock Exchange one finds it is the speculation of people


buying already established stock. The number of new companies floated off successfully since the war is negligible compared with the mass in America and the scores of companies in Canada floated off for mine and oil discovery.
7.15 p.m.
The danger is that British companies will become less adventurous and less speculative, except those still working the richer seams or richer fields which are available on the surface of the earth. Canadian, American and even Swiss and Belgian companies will begin to take the lead, and that means, of course, that this country will not have the same claim on these precious raw materials as it had in the past.
After all, it is not very long ago that the main source Of the world's copper supply was the island of Anglesey, and it is not very long ago that this country controlled the world's mining market and could bring into this country all the raw materials and oil it required. But that is no longer true and unless the Government look at this matter seriously even the present position will be gravely endangered.
When one looks at our existing mining companies one often finds that their reserves are running low and that, owing to taxation, they have not been able to build up sufficient reserves to carry out exploration to make sure that mining and production continues. After a few hundred or even a few score of years the richer lodes and seams are worked out and one finds that more and more control is falling into the hands of Americans, Canadians and possibly other foreign nations. Perhaps that does not worry those who believe they have control through the price mechanism.
But they will find that under the American Foreign Assistance Act, 1948, every American company working overseas is forced by American law to render to the American Government as much minerals as the American Government may decide should be rendered under what is called the Klug Act of that year. The expansion of American investment in this field can be realised when it is remembered that in that very year, 1948, the "small" sum of 700 million dollars was invested in

mining. Unless we can bring mining taxation into some relation with American practice that process is bound to go on to the detriment of this country.
There are other arguments which also make this new Clause of some importance. The first is concerned with administration. The 1945 Act as it applies the present formula which is an ingenious but complex one is liable to error owing to the fact that it is based on two uncertainties; one the final price of the mineral, the other the amount of the ore body within the mine. Therefore, there is a possibility that both the tax collector and the taxpayer are uncertain. There are other simplifications of the whole question of mining taxation that seem to be needed, and something along the lines I have suggested is surely the quickest and most successful way of ridding the system of the complexities which now surround it.
The next argument is the one of common sense. As the law of taxation is interpreted more advantages are given to a British company registered in this country mining tin in Bolivia than to a British company registered in this country mining tin in Cornwall. I know that in 1949 the Attorney-General produced some forensic arguments with great skill to prove his point. We know that the point which he set out to prove was a perfectly good legal one but surely in these times it is fantastic that we should not be able to encourage the development of our resources in this island, which are considerable, because that is an interpretation of the law which while correct can be got rid of by producing a new law, to the advantage of all engaged in oil, tin, copper and molybdenum production in the whole British Empire.
The final argument which I wish to put forward on this issue is that the tax as it stands puts an intolerable strain on British subjects who are competing in the world mining market. It means, first, that foreigners are unwilling to enter into contracts with this country or with companies registered in this country, because they know that the rate of taxation on mines and oil wells is far higher here than anywhere else. Therefore, they are unwilling to see our people developing their resources, and they prefer to see Americans or Canadians doing so, because they know full well there will be more money in the kitty from which they can have a "cut."
If one looks at what has happened in Persia, do the Government consider that one of the root troubles in Persia has been the rate of taxation in this country? If they look at the figures and see that the Persians were receiving in royalties only one-third of what was paid in tax to this Government, they might think again, because what has happened in Persia might happen elsewhere. If the American system of taxation had applied to our oil companies operating in Persia, if there had been this depletion allowance rather than a depreciation allowance, it would have meant that the standard of royalties that the company could have afforded to pay would have been infinitely higher.
We can see the same thing happening in other connections. Throughout the world today British and American companies in certain areas are working or trying to work in harmony. I can think of two major oilfields in which British and American capital is working jointly to produce oil. With the present level of taxation in America on oil production—there is a 27 per cent. depletion allowance, compared with no depletion allowance in this country—it stands to reason that the American side of the partnership more and more demands that the company should come under American registration. It stands to reason that for American capital it is fantastic to have to pay British rates of taxation. That is a great danger. Without mentioning any names, I know that the Attorney-General and the Treasury must be fully informed about the two areas where there is a danger of that happening.
Those of us who have put forward this Clause realise that we are asking for a very large allowance which over a period of years will cost the Government a large sum of money; of that there is no doubt. If this Clause, or something like it, is accepted it will cost the Government probably more than a score of millions of pounds. But if we do not bring our taxation of mines and oil wells and the rest into line with American and world practice we face two dangers. One is that our wells and mines will not be developed; the other is that they will fall into foreign though friendly hands, which, in this day and age, I believe is something that we cannot afford to allow to happen.
The problem is very grave. We can see how changes in taxation have been carried out in the past and recent past.

In 1918 we saw the whole system of taxation changed and the system of depreciation brought in—

The Chairman: The hon. Member cannot go into all these details on this new Clause. He has been given a good deal of latitude, and I hope that he will not go into other matters which are remote from the Clause.

Mr. Fraser: I will conclude, Major Milner, by saying that this issue is very grave. The price that the Government will have to pay in granting this or some other similar concession will immediately be high, but unless such a concession is granted, and granted soon, the result for our mining and oil industries will be disastrous.

Sir Edward Boyle: This is not the first time that this subject has been discussed on the Finance Bill. Hon. Members may recall that two years ago my hon. Friend the Member for Bodmin (Mr. D. Marshall) put forward a similar proposal last year during the Report stage which was perhaps rather more limited in scope than this new Clause. Those of us who have put our names to this Clause agree that it represents a new and, on the face of it, perhaps a revolutionary principle from the point of view of the Inland Revenue.
We quite understand that hon. and right hon. Gentlemen opposite may look at it with some suspicion at first sight, both from the financial and the legal points of view. But I hope that they will at all events carefully consider the suggestion made, because those of us who have put down our names to the Clause think that it will only be by allowing producers in the mining industry to build up tax-free funds, based on a depletion allowance, that the work of discovering new mines can be carried on.
In the mining industry today the burden of replacement costs is possibly even more severe than in the manufacturing industries. The costs of geophysical exploration and prospection are steadily rising, and this work can only be financed from the funds of mines which are at present successfully in operation. These mines are all wasting assets. When a similar Clause was discussed two years ago, it was suggested that there was an alternative solution—namely, that there should be an allowance in respect of all the capi-


tal expenditure which had been incurred in getting a new mine going. That is obviously an alternative for consideration, but I would point out that the tax system only makes contact with mines that are successful. The funds from existing mines have to finance not only new mines which turn out to be successful, but also the empty prospects which have to be written off as losses.
I should like to deal with one classic objection to the principle of the depletion allowance. It is often suggested that if a mine is successful a depletion allowance might mean that a company could recoup its original capital over and over again in other words, that the funds gained from a depletion allowance might be very much greater in the long run than all the money which had originally been laid out in capital expenditure on the mine. One can only say that, where this administrative expedient has been tried, as in Canada and the United States, it has not worked out like that in practice. In those countries, the tax-free depletion funds have provided both the incentive and the finance for new enterprises to be undertaken by the mine producers.
7.30 p.m.
As my hon. Friend has said, we are faced today with a serious raw materials position, and unless we want to go cap in hand for these materials, we must increase the number of producing mines which are controlled from this country. Faced with this serious position, there seems to be a very strong case for a full and careful consideration of the bold administrative experiment which we suggest in this Clause.

Mr. Ormsby-Gore: I, too, wish to support this Clause, moved so eloquently by my hon. Friend. I do not think anyone in the Committee will deny that a definite stimulus to the opening up of new sources of supplies of raw materials is a very urgent necessity for this country at the present time, and all this Clause seeks to do is to provide that very necessary stimulus.
I should first like to make it quite clear that we do not accept that mining operations are in any way comparable with ordinary manufacturing operations. In no other industry, for instance, is there the state of affairs where to increase pro-

duction one has rapidly to bring nearer the day when the most important and valuable asset becomes entirely valueless. We therefore believe that in industries involving the working of natural deposits of a wasting nature special taxation and special fiscal methods are urgently required. These could be provided in three different ways, and I want to indicate quite briefly why we have decided on this particular method.
The first method the Government could introduce would be to increase and extend depreciation allowances. Certainly proposals of that kind are included in the Millard Tucker Report. We believe that those recommendations are extremely desirable, but they are really only tinkering with the problem, and, while we entirely support them, we think that they would do no more than give justice to mining interests vis-à-vis other industrial and manufacturing interests. These concessions on depreciation allowances alone would not be in accordance with our fundamental proposition that mining operations and extracting operations of this kind are quite different from ordinary industrial undertakings.
The second method the Government could adopt would be a method which has been widely canvassed, and which was mentioned by my hon. Friend, and that is the allowing of tax-free profits for the first three years of operation. That, of course, would assist mainly entirely new companies, and I think everyone would agree that in the near future it is to existing and well-established mining companies that we must look for an increase in the supply of raw materials.
We come, therefore, to the third method, of depletion allowances, which we have selected and embodied in this Clause. It is a method which, as we all know, already operates with success in the United States, Canada, Australia and other countries. It provides a definite and urgent incentive to all types of undertakings, both old and well-established ones as well as new ones, and I think it is to the expansion, exploration, surveying and proving by existing companies that we must look for the most significant results in the years directly ahead.
We on this side do not dispute that this is a proposal to give a very special consideration to a special section of industry, but I hope that the right hon


Gentleman and his advisers will take a long view of this and consider whether it might not be better to take a slightly smaller slice out of the ever-expanding cake rather than a very large slice out of a diminishing cake—because that is the tendency that we shall see under existing taxation.
I know that this kind of argument is rather difficult for certain hon. Gentlemen opposite to follow, and I appreciate that they have some difficulty in looking on this kind of proposal in the right light. For instance, last week we had a rather extraordinary outburst from the hon. Member for Kirkdale (Mr. Keenan), although admittedly it was towards the end of a very long session, when he interrupted one of my hon. Friends and said:
The point that not merely amuses some of us hut disgusts us is that for two nights and a day we. have had discussions of proposals for protecting property and finance."—[OFFICIAL REPORT, 12th June, 1951; Vol. 488. c. 2207.]
That has been the long-sustained opinion of some of his hon. Friends, who are apparently very deeply moved by it. Such an attitude indicates that they believe that if only the Chancellor would really knock property about and do it some really serious damage, all the wage earners would be better off. That is a purely Marxist conception of our economic life, and one which we on this side of the Committee entirely repudiate.
We do not accept the proposition that what is good for capital is automatically bad for labour, and I hope that the Chancellor and his advisers have abandoned that kind of old-fashioned restrictive Marxist thinking for a more modern and expansionist outlook. I therefore urge the right hon. Gentleman to give really serious consideration to this Clause, which I believe will in the long-run help to increase the security and prosperity of this country, while at the same time helping—and this is just as important—to increase the, prosperity and security of the poorest people in this country.

The Attorney-General: The three speeches to which we have listened were directed to different aspects of the problem raised by this Clause. The hon. Member for Stafford and Stone (Mr. H. Fraser) directed his speech to the general

urgency of some proposal of this sort. He referred to the situation in Persia, and so on, and said it was of extreme urgency that we should do the most we could to stimulate the development of mineral resources here and abroad. On that aspect of the matter I say nothing. I do not say that I disagree with him, and I do not say that he had not a great deal to commend his argument when he stressed the importance of these matters. But because I think they dealt with the immediately relevant issue raised by his Clause, I wish to direct my observations principally to the two speeches which followed.
The hon. Members for Birmingham, Handsworth (Sir E. Boyle), and Oswestry (Mr. Ormsby-Gore) both directed their argument to the contention that, being of urgent necessity, it is right to adopt this completely new form of taxation. It has been adopted abroad, but it is a new form here, having regard to our own taxation structure. We feel very serious difficulties in the way of adopting that suggestion, and I shall endeavour to say why.
To begin with, of course, this Clause simply provides, without any qualification, for a 15 per cent. allowance on gross income. Hon. Members know that already a great many allowances are given against capital expenditure. There are capital depreciation allowances under the Income Tax Act, 1945, and there are special allowances for mining works in the case of mineral deposits. To begin with, the allowance which is now proposed is in addition to those.

Mr. D. Marshall: The right hon. and learned Gentleman mentioned the depreciation allowances under the Income Tax Act, 1945, but would he not agree that with the reduced purchasing power the depreciation allowances have depreciated out of all existence?

The Attorney-General: I accept that the value of money has diminished—nobody would gainsay that—but that is not at all relevant to the point I am trying to make. I am simply trying to point to what seem to me to be defects in this proposal. The defect of which I am at present speaking is that this is an overall allowance in the form of a 15 per cent. exemption of Income Tax which is given in addition to all capital depreciation allowances, not only those which are obtainable in respect of plant and machinery but to special ones—

Mr. H. Fraser: Mr. H. Fraser rose—

The Attorney-General: May I finish this point and then I will give way. My speech will be more incoherent than usual, if I am interrupted in the middle of a point.
I was saying that this is an allowance in addition to all capital depreciation allowances, not only those which are obtainable in respect of plant and machinery but the special allowances which are given in the case of mining works. That is the first objection.

Mr. Fraser: I am sorry to interrupt the Attorney-General. I only wanted to save him the trouble of speaking further on this point. As I tried to point out in my speech, this Clause would have the opposite effect to what the Attorney-General is saying.

The Attorney-General: I can only say that it would not. It may be that the hon. Member intended it so to do, but all his Clause does is this. I am not trying to make any debating technical point about it, but I assumed from his speech that his intention was that there should be this additional allowance and that it should be an additional exemption of 15 per cent. on top of the capital depreciation allowance. He tells me that that is not his intention, but if that is so then his Clause needs re-casting. As it stands, not only does it do what I have said, but it would also be an addition to the allowance in respect of capital expenditure on the acquisition of mineral sources which was introduced, I think, in last year's Act in relation to foreign mineral deposits.
As hon. Members know, this is an allowance against capital expenditure available to the first purchaser, to the full extent of the amount which he has incurred by way of capital expenditure in acquiring the overseas deposit. This allowance would be in addition to that. The hon. Member says that he wants to sweep those aside, but even if we do sweep those aside and say that we are going to substitute this allowance for those allowances I would say that it is a complete departure from the whole of our tax structure. The whole of our tax structure has been based upon the principle that allowances are given against the actual capital expenditure.
This proposal has a vice which, at any rate, in our view is difficult to condone.

It amounts to a preferential allowance on Income Tax rates. It means that persons who run mining undertakings are going to be taxed at a lower Income Tax rate than anyone else. Once we introduce that principle where are we going to stop? The hon. Member for Stafford and Stone devoted his speech to the importance of developing mining resources. Other hon. Members may point to other sectors of our industry which are extremely important and which also require stimulating.
If one is going to adopt the principle that a preferential rate of Income Tax should be given to a particular sector of industry, what is one's answer to be when other sectors of industry ask for the same relief? If that preferential rate were allowed for one sector of industry and not for others, we should have a higgledy-piggledy system of taxation and we should have different sectors of industry taxed at different standard rates. I am sure the hon. Member would not desire that result. It would lead to complete chaos in our Income Tax structure.
7.45 p.m.
The hon. Member for Oswestry (Mr. Ormsby-Gore) said that, at any rate, that had not happened in other countries. In the case of the United States I am able to point to one extract from a report which appeared in? The Times" in January, 1950. It is headed "Mr. Truman's Tax Message To Congress." The report said:
Mr. Truman said he knew of no loop-hole in the tax laws so inequitable as the excessive depletion exemptions now enjoyed by oil and mining interests.
That, at any rate, is a fairly stringent stricture upon the system as it has been found to operate in the United States.

Mr. H. Fraser: I would point out that there is a move at the moment to reduce the oil depletion allowance from 27 per cent. to 15 per cent.

The Attorney-General: Even if it is reduced I am not sure how far that would meet the criticism that it is a loop-hole. I suppose if the allowance of 27 per cent. were reduced to 20 per cent., it would be a less profitable loop-hole, but that would not prevent its being a loop-hole.

Mr. Ormsby-Gore: In Canada the Government have increased the depletion allowance from 25 per cent. to 33 per cent. on their own initiative.

The Attorney-General: I have not searched the newspapers for comments which have been made on the operation of the same system in Canada. I am not in a position to say whether the experience of the operation of the system in Canada is different from the experience to which President Truman refers in his speech.
At first sight it seems to us that it is quite out of the question to accept this proposal, for the reasons I have given. It is simply a proposal to give a preferential tax rate which would lead to the most hopeless chaos. If we are to act fairly as between different classes of taxpayer, we must say that as one class is entitled to a preferential tax rate so must we consider the claims of other sectors of the tax paying community to see whether we ought similarly to extend to them such preferential rates of tax.
Reference has been made to the Millard Tucker Committee. That Committee recorded the view that business profits of a mining concern could not be properly computed without an allowance for capital expenditure. They went on to say that the problem was one of a class where the taxation treatment of the owner of a business could not be considered in isolation from the treatment of other classes of taxpayer.
They said it would be wrong to recommend an allowance to the purchaser without examining the question whether there should be a corresponding charge on the seller and what effect the transactions would have upon the Schedule "A" liability of the parties. In other words, they were limiting their consideration prima facie to allowances on purely capital expenditure, but they went on, having posed the questions and having indicated those questions which would need consideration, to say that it was not really within their terms of reference and that it was one—and in this I would respectfully agree—which would be proper for consideration of the Royal Commission under Lord Justice Cohen.
I have ventured to criticise the proposal but, as I say, in due course the question of depreciation allowances in connection with mineral rights will, no doubt, form part of the subject which the Royal Commission takes into its consideration, and this suggestion, if it is put

before the Royal Commission, would no doubt also be carefully investigated by them. At the moment, I hope the Committee will agree that, at any rate, I have given reasons why we should not accept the Clause as it stands.
Incidentally, as the hon. Member who moved the Clause has suggested, it would involve a very considerable expenditure. I am told that in the year it would cost approximately £25 million. We could not possibly accept the Clause as it stands on the Order Paper. What may eventuate as a result of the findings of the Royal Commission, if they investigate this suggested departure from our taxation schemes, I cannot say, and I can give no kind of undertaking; but I hope the Committee will agree with me that, for the reasons I have given, we could not accept the Clause in its present form.

Several Hon. Members: Several Hon. Members rose—

The Chairman: I hope the Committee will agree to come to a decision. The time which I was assured this Clause might take has already passed and the right hon. and learned Attorney-General has given a reply. I hope that the Committee will come to a decision soon.

Mr. D. Marshall: I wish to make only two points, and I will be brief. I certainly do not wish to detain the Committee for very long but, having heard the argument which the right hon. and learned Attorney-General has just given to the Committee, I thought there was a point which perhaps he had not taken into consideration. He based his argument upon the fact that there should not be a different standard of tax on this industry from that imposed on another. But surely he would be the first to agree that the principle of Purchase Tax in itself with its different rates makes such a difference in taxation.

The Attorney-General: The Attorney-General indicated dissent.

Mr. Marshall: The right hon. and learned Gentleman shakes his head, but in the case of Purchase Tax there is a difference in the amount of taxation charged.

The Attorney-General: I was dealing with the standard rate of tax on income; that is the difference.

Mr. Marshall: That may be so, but at the same time there is a difference in tax in the example I gave.
The point I wanted to emphasise was this—and I said that I would not detain the Committee for any length of time: there is no hon. Member in the Committee who does not agree that one of the greatest difficulties which confronts us now and which will confront us for many years to come is the shortage of raw materials. The right hon. and learned Gentleman himself accepted the principle which was argued by my hon. Friend. The question is whether anything can be done to stimulate the production of these raw materials. But it is quite certain that if action is not taken by way of relief from taxation, nothing will be done to encourage the production of raw materials from our own soil. A few years ago I raised the same question in connection with Cornish tin production.
I think the right hon. and learned Gentleman can see for himself that, with the rate of taxation at its present level and without any stimulus by way of relief of taxation at all, it is quite absurd to expect adventurers, such as we mean by the old use of the term, in the Cornish tin industry, to explore the possibilities of obtaining the extra mineral wealth from our own soil.
I sincerely trust that when the Royal Commission has been set up it will look into this matter fully, as the right hon. and learned Gentleman rightly suggested, and will look into the possibilities of stimulating the production of mineral wealth in our own country. I trust, too, that it will look into methods of achieving that end. In my view the only method is by using a form of relief of taxation which will quicken interest and will provide an incentive to explore the possibilities of obtaining that extra mineral wealth.

Mr. H. Fraser: In view of the right hon. and learned Gentleman's inability to do anything further today without redrafting of the Clause, and pending the further report of the Cohen Committee. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(RELIEF FROM PROFITS TAX WHERE ALL THE PROFITS ARE PAID TO EMPLOYEES.)

After the end of their accounting period for the year nineteen hundred and fifty the enactments relating to the profits tax shall not apply

to any trade or business in which all the profits, after the payment of the requisite dividend on any preference preferred ordinary or any other fixed dividend capital and appropriate allocations to reserves, are either distributed to all the persons who at the end of the accounting period of such trade or business in respect of which the profits have been determined are employed in such trade or business or retained wholly for the benefit of such persons.—[Sir W. Wakefield.]

Brought up, and read the First time.

Sir Wavell Wakefield (St. Marylebone): I beg to move, "That the Clause be read a Second time."
The purpose of the Clause is to exempt from Profits Tax those companies and organisations where the workers and the producers own the whole of the equity capital. The illustration I should like to give is that of the John Lewis Partnership, whose headquarters are in my constituency. That organisation has an irrevocable trust, which provides that the whole of the profits on the ordinary shares shall go to the workers. That is to say, all profits which are not needed for retention in the business for working capital or as reserves must be distributed among the workers.
Proposals in the Bill under discussion bear very hardly upon this kind of organisation. In the example I am giving, the effect of the increased Profits Tax on this company means that a fortnight's bonus payments which would have been paid to the workers cannot now be paid. This type of organisation, with its co-partner-ship scheme, has a very large proportion of its capital in the form of preference shares, and I think that is true of various other organisations in the country which have been formed for the same reasons as those of the John Lewis Partnership. Because there is such a high gearing of preference capital to ordinary shares, it means that the increased Profits Tax severely depletes the amount of money which otherwise would be available for distribution to the workers. In fact, the whole of this Profits Tax now falls upon the earnings of the workers.
I put it to the Chancellor of the Exchequer that he and other members of the Government have again and again urged the importance of increased work, of increased production and of the desirability of incentives. The effect of the proposals in this Bill is definitely disincentive, and I therefore urge once again that


Members of the Government should implement in actions in the House of Commons what they preach on the platforms outside.

Captain Crookshank: Oh, no!

Sir W. Wakefield: We have here a clear example of exactly the contrary to what Members of the Government have said in speeches in the country. They want extra production, they want extra work, they want to see incentives; and yet by means of proposals in this Bill, by which the extra Profits Tax is imposed, we are introducing a strong disincentive to workers in co-partnership organisations of the kind which I have illustrated. I hope, therefore, that this Clause will be favourably considered by the Committee and will have the sympathetic support of the Chancellor of the Exchequer.

Mr. Thornton-Kemsley: I am grateful for this opportunity of supporting this Clause, and to you, Major Milner, that you have seen fit to call it, because it embodies a new principle and one which has not been discussed on any previous occasion when the Finance Bill has been under discussion.
The present system of taxing company profits is based upon the conception that the earnings in an enterprise go partly to the workers and to the management in that enterprise, in the form of salaries and wages, and partly to the lenders of capital, in the form of dividends derived from profits.
8.0 p.m.
Whilst this distinction between managers and workers on the one hand and investors of capital on the other is, in general, justified in the present organisation of our trade and industry, yet in the diverse pattern of our industry there are one or two exceptions. These occur where the workers in an enterprise share between them the whole of the profits of their labours. Cases of this kind are not at present numerous, but they are increasing, and they certainly ought to be encouraged in every way open to the legislature.
I hope that in a few minutes—fairly soon, at any rate—we shall be discussing a new Clause in the name of my hon.

Friend the Member for Flint, West (Mr. Birch)—[Profits Tax. Exemption of fixed preference dividends]. If that Clause is adopted its effect will be to end what the "Economist" called some weeks ago the "fantastic anomaly" by which equity shareholders bear the whole weight of the new 50 per cent. tax upon distributed profits, not only in respect of their own dividends but in respect also of the Preference dividends which rank in front of them. But in an organisation run on co-partnership, co-ownership, or profit sharing lines the anomalous effect of this taxation is seen in its most inequitable form. In such cases the whole burden of the taxation of profits falls upon the workers themselves.
Let me give for an example an organisation which is existing in this country at present and which I can use best as an illustration because I know it best—the John Lewis Partnership. Here let me divulge an interest. I am, in such spare time as I have from being a Member of Parliament, employed in a professional capacity to give advice and help on property matters in connection with the John Lewis organisation, and so I do know it from the inside. The John Lewis Partnership is essentially a producer cooperative society. It has 11,500 members sharing between them in one way and another the whole of the profits derived from the trading in some 20 department stores and about 40 specialist food and other shops up and down the country.
Since it is not essential to the idea of partnership that the workers should contribute capital, the proportion of equity capital has been deliberately kept as low as possible, and about 90 per cent. of the nominal capital takes the form of debentures and fixed interest preference shares. The whole of the ordinary capital is held by trustees for the benefit of all the workers, who share among themselves the real profits of their enterprise.
The sharing of profits is done in two ways. First of all it is done indirectly in the form of such things as a noncontributory pension scheme, welfare arrangements and collective amenities of various kinds; and secondly directly in the form of the distribution of the residual profits, which normally would go to the equity shareholders, in fixed interest bearing shares in the parent company. John Lewis Partnership, Limited.
It seems to me that there is a fundamental distinction between the normal public company and a partnership of this kind. The former, the normal public company, is a combination of owners of capital who normally take no active part in the business themselves, but who hire the workers in the business. The latter is a combination of workers who themselves do all the work necessary for carrying on their undertaking, but who hire the capital. In the former case the remuneration of the workers is fixed and the return on the capital varies with the results of the business. In the latter case the reward to the providers of the capital is fixed and the remuneration of the workers is the variable element.

The Economic Secretary to the Treasury (Mr. John Edwards): Is it not true at the moment that the John Lewis Partnership are, in fact, dispersing their funds by way of bonuses, not by fixed interest bearing shares in the way the hon. Gentleman has described?

Sir W. Wakefield: I think the Economic Secretary has misunderstood. It is true that any distribution that is made is made by means of a bonus on earnings, not by way of interest, but that bonus distribution cannot be made because of the increased amount of money that is required to pay the tax on the preference dividend, which has got to be paid in any case. I do not know whether that answers the point that is causing anxiety to the Economic Secretary?

Mr. Thornton-Kemsley: Perhaps I could take the matter a little bit farther. If it were possible to know in advance the result of each year's trading the whole of the workers' remuneration would be paid upon a weekly basis, or a monthly basis if a salary were drawn instead of wages; but the hon. Gentleman will know that it is not possible to know in advance how the year's trading is going to work out, and part of the remuneration has to be deferred until the result of the year's trading is known, and when that is known it is issued as a general bonus to each worker in proportion to the salary or the wage that he or she earned in the previous year.
This deferred remuneration is as much a part of the worker's total income as is

his salary or wage, and quite properly therefore—and I think this was the point the Economic Secretary had in mind—it is allowable as a deduction in computing profits for Profits Tax purposes. On that I would have no quarrel with him at all. That is perfectly justified. The quarrel seems to me to lie rather with the inevitable consequence that the Profits Tax in these circumstances falls not upon the unearned dividends of the ordinary shareholder, but on the earned deferred remuneration of all the workers in the business. That in a nutshell is the case.
It is not possible for this consequence to be avoided since the arrangements are based upon irrevocable settlements in trust, under which the whole of the earnings of the business, so far as they are not required to be retained for the purposes of the business, must go to the workers, and they cannot possibly go anywhere else. The effect of this Clause is to exempt any company, of which the whole of the profits are distributed to all the workers, from the operations of the Profits Tax.
That there are not many such companies at present does not invalidate the claim that those that there are constitute a special case, which on the grounds of equity ought to be met by a separate provision of the law. It is for this reason, and because I believe from my own experience that experiments in co-partner-ship, shared ownership or producer co-operation—call it what one will—ought to be encouraged by Government action that I beg the Chancellor to accept this Clause.

Mr. Macdonald: In rising to support this Clause I promise to be very brief. I will try to confine my remarks to five minutes, for this is a subject on which I could speak at some length. I shall go further than the hon. Member for St. Marylebone (Sir W. Wakefield) and the hon. Member for Angus, North (Mr. Thornton-Kemsley), in that they were dealing with the John Lewis Partnership and schemes of a similar kind, and I shall deal with profit sharing generally.
We are all aware of the fact that during the next few years, if we are to secure the maximum production for re-armament and the maintenance of our standard of living, we have got to get complete understanding and


trust between capital and labour in this country, so that we can secure the maximum effort without the charge being made by many of the workers, "Why should I work harder in order to increase the boss's profit in which I do not share?"
I believe increasingly that this is the way to get rid of a great deal of friction, which may arise between capital and labour, and so prevent a maximum production drive. Large profits are certain to be made during the next few years by a very large number of companies, particularly those in the re-armament industry. I believe in substantial profits. I believe in them as an incentive, and I believe that they should be earned, if the yare earned, in free competition and not by a monopoly, and that they should be shared generously with those who help to create them.
During the last 60 years there have been many splendid voluntary schemes. We all know of those of J. & T. Taylor and of the South Metropolitan Gas Company, Vauxhall Motors, Bryant and May's and many other schemes, but unfortunately, in spite of the fact that these schemes have been so successful and have in every case increased production, we have to admit that owing to the opposition of a large number of industrialists on the one side and the suspicion of trade unions on the other only 2 per cent. of the working population of this country today benefit from these schemes.
It is vital to this country that as large a number of industrial workers as possible should benefit by such schemes, but we cannot urge voluntary schemes if people are not freely prepared to undertake them. In this Clause we get a splendid opportunity of giving an inducement from the Government in the cause of maximum production by telling those firms that introduce generous profit sharing schemes that they will receive a reduction in their distributed Profits Tax.
I would urge the Chancellor of the Exchequer to give consideration to this matter and, if possible, to give it a year's trial, so that we can get clear evidence of the greater production that will be achieved and the improved labour relations that will result. Profit sharing in industry is not the only thing which will produce the maximum production, but it is the corner stone in true industrial

relationship and partnership. I ask the right hon. Gentleman to give it the opportunity of proving itself to the country, and on a far wider basis than it does today under the voluntary schemes.

8.15 p.m.

Mr. J. Edwards: With a good deal of what the hon. Gentleman has just said I find myself in agreement, but I think that he has misunderstood the Clause. The hon. Member for Angus, North (Mr. Thornton-Kemsley), said that this was a special case. I hope to show that it is not a special case at all. When I intervened to ask a question, I wanted to confirm what I thought I knew already, namely, that the particular case under notice, the John Lewis Partnership, paid out bonuses and that those bonuses were allowed as a deduction in computing the profits of the company for Profits Tax as well as for Income Tax. That is to say, that in so far as we are concerned with the profit sharing aspect of the case, there is no Profits Tax point of grievance on the bonuses as they are paid.
Both the hon. Member for St. Marylebone (Sir W. Wakefield) and the hon. Member for Angus. North, went on to develop the case in another way. If I understood them aright. they were saying that because the company must provide for fixed preference dividends and the Profits Tax at 50 per cent. appropriate to such dividends, and also Profits Tax at 10 per cent. on profits put to reserve, the amount of bonus which could be paid out under the profit sharing scheme was correspondingly less than it would have been had there been no Profits Tax. I think I have accurately stated the case.
I began by saying that this was not a special case; and this is not a point which arises only in relation to profit sharing schemes. Any company which has to pay Profits Tax at the higher rate on its dividends and 10 per cent. on its reserves can say that if it had not had to pay Profits Tax it would be able to pay correspondingly more bonus to its employees. Any company that pays bonuses could put forward the same case as was presented by both hon. Gentlemen. For those reasons it seems that we are here asked to accept a principle which we cannot accept.
Apart from the point of principle there are one or two other points which we


ought to bear in mind. I am advised that if anything like this were done it would open a wide door to avoidance of Profits Tax. That is a consideration to be borne in mind. There is also the limited point that in so far as anything like this were conceded we would do away with the incentive to put profits to reserves. A company, under the arrangement contemplated in the Clause, would pay no Profits Tax whether it paid out all its profits as dividends or kept them in the business. Fundamentally one must assert, as was asserted in the previous discussion on a similar theme, that the rate appropriate to distributed profits ought to apply to dividends, whoever the recipient should be. I must therefore resist the Clause.

Mr. Thornton-Kemsley: On the last point made by the hon. Gentleman, may I point out that it is only true if there is a special ratio between the preference shares and the equity shares?

Mr. Edwards: That remark rather anticipates the debate which may arise in a few moments upon another new Clause. There can be no denying that any company that pays these bonuses is in a position to say, "If we had not had to pay Profits Tax we should have had more money to distribute."

Sir Herbert Williams: I think that the Economic Secretary is right. I am a director of a company and we always give a bonus. We examine the fund from which we pay out the bonus to our workpeople and we say, "This seems appropriate." I have not the faith in profit-sharing schemes displayed by the hon. Member for Roxburgh and Selkirk (Mr. Macdonald).
What has happened to industries in which there have been profit-sharing schemes? There was profit sharing in the coal mining industry from 1921 and the industry was nationalised. There were profit-sharing schemes in a large part of the gas industry and that industry has been nationalised. There were co-partnership schemes in the iron and steel industry and that has been nationalised. Now only Mr. Taylor of Batley is left.
The suggestion that profit-sharing schemes make everybody contented is not true. Nowadays the distributed profits in most industries are so small in relation to

the sums paid out in wages and salaries that no substantial contribution can be made to the earnings of the work-people by any kind of profit sharing. That is why such schemes always leave me cold.

Mr. Heathcoat Amory: In spite of those industries having been nationalised, more firms today practise profit sharing than at any time in our history.

Sir H. Williams: The bulk of them will probably be nationalised. I am sure that only a very small number are left. We have only to look at the Ministry of Labour Gazette which pubishes an annual return. About 2,000,000 people who were engaged in some kind of profit-sharing scheme are now the employees of nationalised undertakings and very few others are left.

Mr. Amory: The last Ministry of Labour report to which my hon. Friend has referred was for the year 1938.

Mr. Macdonald: The hon. Member for Croydon, East (Sir H. Williams), ought to visit a number of firms which have profit-sharing schemes and see the increased production and improved industrial relations which have been brought about. To speak in so scathing a way about such an important development is quite wrong. Profit-sharing schemes will be an integral part of future industrial relations.

Question put, and negatived.

New Clause.—(INCREASED REDUCTION OF DUTY ON PUBLICANS' LICENCES.)

In section thirteen of the Finance Act, 1942 (which provides for a five per cent. reduction of duty on publicans' licences in respect of diminution in supplies of wines and spirits), for the words "five per cent." there shall be substituted the words "twenty-five per cent." —[Sir J. Mellor.]

Brought up, and read the First time.

Sir John Mellor: I beg to move, "That the Clause be read a Second time."
The Finance Act, 1942, reduced the duty on publicans' licences by 5 per cent., and the Clause proposes to substitute for that a reduction of 25 per cent. An identical Clause was considered by the Committee in 1946 when the then Chancellor of the Exchequer gave some very definite encouragement, saying:
My sympathies are deeply engaged with the ideas … which lie behind this Amendment.


A little later he said:
Who knows but that next year what is impossible now will he possible."—[OFFICIAL REPORT, 25th June, 1946; Vol. 424, c. 1126.]
The need for some relief was great then, but it is even greater now, although for a very different reason.
In 1946, the great trouble was that the publicans could not obtain adequate supplies. Now the trouble is that they cannot sell the supplies which are available owing to the very serious shortage of purchasing power. Clear evidence of that is to be found in the figure of the output of beer for United Kingdom consumption for the first three months of this year, which was lower than for the corresponding quarter of any year since 1940. That is a rather striking fact, and it shows the diminution in consumption is entirely due to the fact that the customers have not the cash. Of course, whisky is exceptionally scarce, so scarce that the demand is unsatisfied. In the case of all other beverages they are plentiful, but only so because the consumers cannot afford to buy.
The duties on spirits were heavily increased by the Finance Act, 1948, and that had a damaging effect upon the trade. Unfortunately the very small reduction in the Beer Duty in the Finance Act, 1949, produced little effect. I would point out that this Clause relates solely to publicans' licences. The duty payable was fixed in 1910, and the amount was fixed at half of the gross annual value of the premises for rating assessment. The only reduction was that I mentioned, the reduction of 5 per cent. in 1942, and I would submit that there is now a strong case, in view of the experience of the trade, for a much more substantial reduction.
I am told that altogether in the country there are about 70,000 licensed houses and that of those approximately 14 per cent. are managed houses, 68 per cent. tied houses and 18 per cent. free houses. Apart from the managed houses I should make it clear that no gain would accrue to the brewers from this Clause being incorporated in the Act. In the case of tied houses the duty is almost invariably paid by the licensees and of course in the same way in the case of the free houses. Therefore, the benefit of this Clause would go almost entirely to the licensees.
In 1946 the then Financial Secretary to the Treasury stated that the reduction in Duty which was asked for then and for which I am asking now would cost £600,000. That is reported in HANSARD on 25th June, 1946, at column 1122. The Chancellor of the Exchequer estimated that in the current financial year the total revenue from beer and alcoholic drinks should be £368 million. Therefore, the relief for which I am asking would, if granted, represent something less than one five hundredth part of the total revenue from beer and alcoholic drinks. I think I may claim to be making a very modest request in a very good cause.

8.30 p.m.

Lieut.-Colonel Sir Thomas Moore: In supporting the Clause I feel somewhat embarrassed, having spoken on the same subject on two successive days, partly because my constituents, should they read my remarks, may gain the impression that I have a personal interest in the matter. I suppose that I have, but I think it is an interest that is shared by practically every other Member of the Committee, except, possibly, the hon. Member for Ealing, North (Mr. J. Hudson), and some of his "fellow travellers."
In justification of my intervention I advance the plea that whisky, like food and exercise, if taken in moderation, has no unharmful, but possibly beneficial, effect on the community as a whole. It is only when any one of these things is taken to excess that it becomes a real menace to the physical and moral health of the community. Although I may not have much of a personal interest, I have a very distinct national interest, and I want to address my remarks to a rather narrow angle: that is, to the whisky side of the Clause.
We all realise, especially Scottish Members, how very important to Scotland is the manufacturing side of the industry. Secondly, although this has no strict relevance to the Clause, it is important to our dollar position. As I pointed out a few nights ago, when speaking to an Amendment moved by my hon. and gallant Friend the Member for Perth and East Perthshire (Colonel Gomme-Duncan), there can be no possibility of a healthy and permanent foreign export trade unless it is backed by a satisfactory home market.
As long as the publicans are strangled in their efforts to sell the products of Scottish factories, so also will our home market be strangled. That is one of the chief, if not the main, reasons why I support the Clause. We must give the publican a chance to sell his wares. We must make it profitable for him to sell them, and by doing so we shall be helping to improve the whole economic situation.

Mr. Manuel: Before he leaves that point, will the hon. and gallant Member explain how a reduction or an increase in the amount which a publican pays for his licence interferes in any way with the selling of his wares?

Sir T. Moore: As my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has pointed out, the charges on the publican are excessive. In the First World War, owing to the shortage of supplies, the duty on publicans' licences was reduced by 5 per cent. to 75 per cent. Yet today and during the recent war, with an enormously reduced turnover, the reduction is still only 5 per cent.

Mr. Messer: It makes no difference to the licensee.

Sir T. Moore: The Chancellor of today is not as wise as the Chancellors of 25 and 30 years ago, and what is to be left of this industry for the Conservative Chancellor of the future I really do not know.
I often wonder whether it would not be wise for the Economic Secretary to ponder over a sliding scale for this duty; whether it could not be based on the amount of spirits which a publican sells during the year, so that he could either pay in arrear or get a rebate, according to the amount he sells. It seems to me quite unfair that there should be a standard rate which has no bearing whatever and no relevance whatever to the amount of spirits that the publican sells during the year. I put that out for the thought and consideration of the Economic Secretary as a fair way out of the present somewhat irresponsible method of taxing publicans.

The Deputy-Chairman: This is a definite sum; it is not for a sliding scale.

Sir T. Moore: Yes, you are perfectly right, Sir Charles, and, of course, I propose to obey your Ruling.
As my hon. Friend has pointed out, it is just five years since we got one crumb of hope from the then Chancellor. My hon. Friend has quoted his remark on that occasion when he was giving the 5 per cent. and he said we would hope to do better things in the future. If it is to be another five years before anything concrete happens, there will be no licence holders and no trade for those licence holders to sell to and I can see the Chancellor looking round for a trade to rescue. He will have succeeded in having contributed his share to destroy one of the fundamental trades of our country. One can see the dead goose giving a cackle of cynical amusement, but the Chancellor may possibly have lost his egg.
I therefore come back to my original proposal that there should be a graduated tax which would reflect—

The Deputy-Chairman: I have already stopped the hon. and gallant Member talking about a graduated tax.

Sir T. Moore: I was carried away by the wisdom of my suggestion.
I shall not detain the Committee further, but will leave the matter in the hands of the Chancellor because I believe that there is some very powerful argument in the case we put forward and I believe that if the Chancellor were to accept the Clause, even as it stands, he would in due course find that he would benefit substantially and the publicans would also benefit.

Mr. Jay: Like the hon. and gallant Member for Ayr (Sir T. Moore) I am rather conscious of the fact that we discussed this subject to some extent in a way yesterday. I said then that if we were to take the action then suggested and diminish the privilege of the publicans in the matter of the size of the bottles sold by off-licensees the publicans might think themselves entitled to some compensation for a reduction of the licence fee. I said that this did not seem a year in which we should pick out that particular form of tax relief and I can only add to what I said then that the case for such a relief would be even smaller if the other action had been taken on the matter of the size of bottles.
After all, this is a year when we are having to increase taxation rather than to


reduce it and it would be out of relation' to the rest of the Bill if we were to make this concession. I think the hon. Member for Sutton Coldfield (Sir J. Mellor) was exaggerating rather when he talked of publicans being stricken, or strangled, or prevented from plying their trade by the present level of licence duty. Nor do I think the duty has any practical relevance to the present rate of exports of Scotch whisky.

Sir H. Williams: I was a little disappointed in the Financial Secretary. Like the two previous speakers I have no connection with this industry except that as a director of an insurance company I insure a lot against the loss of their licences, but that is rather remote. However, I am told that the publicans are having rather a bad time, worse than they have had for many years past. Because of that, they are entitled to some remission of the burden that falls upon them.
We all realise that this is a year of increased taxation, but if people are suffering economically because of the burden of taxation they carry, even though indirectly, due to the fact that the price of the commodity they sell is exceptionally high, and they have to meet this overhead expense irrespective of the amount they sell, then on the grounds of sympathy they are entitled to sortie consideration.
Just as I thought when I moved the "small bottle" Clause yesterday, the on-licence holders are entitled to sympathetic consideration from the hard-hearted team on the Government Front Bench. The Chancellor is missing. I suppose that he is at the present moment in an unlicensed restaurant. [Horn. MEMBERS: "Oh!"] Yes, the Kitchen Committee of this House does not pay licence duty and even then it loses money. However, that is in passing, but I thought I would mention it to remind the Financial Secretary that there is a case behind this, namely, that here is a body of traders who are having a very thin time. They are heavily burdened by the taxation on the commodity they sell, and they are also burdened by this direct charge which they have to pay in any event. They are entitled to some consideration other than has been given to them tonight by the Financial Secretary to the Treasury.

Mr. Gerald Williams: I agree with every word spoken by my hon. Friend the Member for Croydon, East (Sir H. Williams). If the Financial Secretary is not aware of how some of the small beer houses are being hit, I will put it to him in this way: when they sell a pint of beer they make lid. If they have quite a good evening in a small country public house they may sell 60 pints of beer. Their reward for this is 7s. 6d. It is impossible for them to carry on on those lines and so they have to go out and do other work.
When it is considered that they should be able to make their living out of the house they are keeping, it means that they are having an extremely bad time if they are forced to do other work owing to the high nature of this tax. It is a little easier where spirits can be sold, but this is not possible in many small country public houses, and in the places where whisky can be sold, it is not always obtainable. So they are being hit all along the line.
The law of diminishing returns is coming in here and the Chancellor may be forced to do something about it because, owing to the high nature of the tax, there is less being sold. It is not like cigarettes. People crave for cigarettes and will have them. I dare say that the right hon. Gentleman might even put a little more on cigarettes and people would still smoke, but some people consider beer to be a luxury and, when things are tight, they have to cut down on it. If it gets any worse, the Chancellor may well be forced to reduce this tax.
His predecessor said he would like to do something about it. He went further and said it was the sort of thing he would like to do. I would add to that, "Me, too." It is a thing we would all like to do, and it may well become necessary owing to the rising costs and the lower consumption. The Financial Secretary has given us only a very brief reply, so I hope he will consider it again and say a few more words to those who have spoken from this side of the Committee.

Lieut.-Commander Braithwaite: In resisting this Clause I thought the Financial Secretary was on sound grounds this year when he pointed out that it was a year in which concessions could not be made, but that is no reason for the case not being deployed. If I may return to


one of my favourite descriptions, I think the publicans should take their place in the annual parade so that their case should be kept under consideration.
My hon. and gallant Friend the Member for Ayr (Sir T. Moore) put the debate on a rather nationalistic level for a few minutes. Indeed, there was a moment when I thought he was going to discuss the Estate Duties. It is worth the while of hon. Members who represent English constituencies to remember that the problem has now passed far beyond that of the consumption of spirits. There has also been a severe falling off in the consumption of beer, and the figures show it. That may bring joy to the heart of the hon. Member for Ealing, North (Mr. J. Hudson) who is absent at the moment.
8.45 p.m.
There are many ways in which publicans can be assisted. The beer duty is very high. Many reasons are adduced for the falling off in consumption and the lack of attendance at public houses. I heard one licensed victualler in Bristol say that the advent of television had done a good deal to keep people at home in the evenings. There was a good deal in what he said. Perhaps they took their beer home with them but, anyhow, they were not patronising him, and he was considering what he could do to get a television screen into his house to see if that would bring the customers back.
These are the sort of factors we have to consider. We should remember that this matter was last reviewed in the Finance Act of 1942, and that nearly 10 years have passed and there have been many social changes. While I thought that the Financial Secretary was on sound ground in resisting the Clause this year, I hope that the problem has not been dismissed from his mind or from the mind of the Treasury. It is the sort of thing which ought to be kept under review.

Mr. Douglas Houghton: The hon. and gallant Gentleman can be quite sure that it will be.

Lieut.-Commander Braithwaite: I fear that the hon. Gentleman's interruption had a somewhat sinister implication. Knowing him as we do, I would suggest that what he had in mind was a raising

rather than a lowering of the duty. I have never known the hon. Member advocate in this Committee that we should let anybody off any taxation. My hon. Friend the Member for Tonbridge (Mr. G. Williams) talked about conditions in "pubs" being tight and I would say that the hon. Member for Sowerby (Mr. Houghton) is the sort of person who would drive people to getting tight.
I hope that this problem will be borne in mind. There is no doubt that it exists. Licensed victuallers are undergoing a falling off in their customs and I hope that, from year to year, the Treasury will keep this matter under review. That remark is made not only for the benefit of the Chancellor who has introduced this Finance Bill, but for the benefit of his successor who may or may not be within earshot at the present moment.

Dr. King: I am glad that the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite), raised the important issue which he has just mentioned. I agree with most of what he said, apart from his diversion at the expense of my hon. Friend the Member for Sowerby (Mr. Houghton); but while I agree with him that it is impossible for the Chancellor to make this concession at a time when we are increasing tax burdens everywhere, I think it is about time that some Chancellor looked at the savage, inequitable nature of the burden which the licensed victualler has to bear. The whole structure of this taxation should be studied.
I intervened to say that the burden which the licensed victualler faces could have been easily alleviated if the brewers had passed the profits that they are making on the increased price of ld. which they have placed on beer, or, alternatively, if they had not raised the price of beer and had allowed the licensed victuallers to have the increased consumption which there would be apart from that. I was interested in what was said by the hon. and gallant Member for Ayr (Sir T. Moore). Yesterday the national newspapers reported that a Scottish brewery made a 60 per cent. dividend last year. Out of these gross dividends the licensed victuallers might well have been helped.

Question put, and negatived.

New Clause.—(PROFITS TAX: EXEMPTION OF FIXED PREFERENCE DIVIDENDS.)

Paragraph 4 of the Fourth Schedule to the Finance Act, 1937, shall be amended by the insertion of the following:
Provided that any payment of fixed preference dividend on shares authorised or in issue on or before the tenth day of April, nineteen hundred and fifty-one, shall not be regarded as a payment of dividend or distribution of profits, but shall be regarded as a payment of interest for the purposes of the profits tax."—[Mr. Birch.]

Brought up, and read the First time.

Mr. Nigel Birch: I beg to move, "That the Clause be read a Second time."
At the present time, money distributed in preference dividends ranks for the purposes of Profits Tax in exactly the same way as money distributed as dividends upon ordinary shares, though, of course, all the money for the tax actually comes out of the pockets of ordinary shareholders and not out of the pockets of the preference shareholders. On the other hand, money distributed as interest on loans or debentures ranks as an expense against profits, and is charged against those profits before a balance is struck which is subject to Profits Tax both on distributed and undistributed profits.
What this new Clause seeks to do is to put fixed preference dividend payments—I emphasise the phrase "fixed preference dividend payments"—in the same position as interest upon loans for the purpose of assessing liability to Profits Tax. It is an old anomaly with which this Clause seeks to deal, and it has existed ever since the Profits Tax was first imposed, but, since the tax was first imposed, the whole scale of the tax has altered, and the alteration of the scale alters the position fundamentally. After all, if we tax something at 5 per cent., it might create an anomaly, but, if we tax it at 50 per cent., it might prove to be a real injustice.
My hon. Friend the Member for Angus, North (Mr. Thornton-Kemsley), mentioned what the "Economist" said on this subject the other day, and I would like to quote one sentence from that article, because it should go upon the record. The "Economist," in its article upon the Budget, said this:
To have raised the distributed Profits Tax to 50 per cent. without making any attempt to

end the fantastic anomaly of equity shareholders bearing its full weight, not only in respect of their own dividends but also in respect of preference dividends, is surely impossible to reconcile with the Chancellor's professed object of penalising dividend increases.
That seems to me to put the main case against what the Chancellor has done very clearly, but I should like to add to it a certain number of other objections to the effect of this tax.
The first is that the tax is grossly unjust as between different companies. We may have companies making the same amount of gross profits, one of them with a certain amount of debentures, one with large preference capital and another with neither. They would all pay quite different rates of tax on the same gross profits. Not only will they pay these different rates of tax, but, at the time their capital structure was set up, it was quite impossible for them to know that they were likely to let themselves in for different rates of tax.
Clearly, if anyone had known in the 30's, we will say, that the distributed Profits Tax was likely to be anything like 50 per cent., no one would ever have issued preference capital. On the other hand, not knowing that, they were clearly right to issue it, because it was considered a much more prudent thing to do to have a certain amount of preference capital than to over weight the company with loan capital.
The effect, as in so many of the Government's other actions, is that somebody is penalised for doing something which, at the time he did it, was clearly right, not only in his own interests, but in the national interest, and it penalises him in a way which it is very difficult for us to see how anyone could foresee. I think we rather lower morale if we go on penalising people for doing what is right simply because it suits the Revenue to do so. Therefore, the first reason I put up is the inequity as between different companies.
The second reason is that a preference dividend is in the nature of a fixed charge. or, rather, is to a certain extent analogous to a debenture charge. If the credit of the company is to be worth anything, it has to pay the preference dividend, and it cannot do anything to reduce it. Therefore, in the context of this tax, the analogy


between the preference dividend and the debenture is very close.
The third reason is another case of injustice. Supposing a company has been in low waters—as many companies even now still are—and is now getting out of that difficulty, but incurred during that period of difficulty considerable arrears of preference dividends. If it seeks to clear off those arreas, all money distributed for that purpose would be liable to a Profits Tax of 50 per cent., whereas during the time the default was incurred, the tax was nothing like so high. Therefore, through a misfortune, the company would incur a far higher level of tax than if it had been more fortunate. It means that we are kicking somebody who has had a misfortune, and I think that is an injustice.
My fourth and last reason is the one I touched upon just now, that the present set-up of the tax makes it almost certain that the great weight of new company finance will have to be raised by loan, and we have seen some startling examples of that during the past year. Many large companies have raised loans—very often short-dated loans—and very few indeed have raised fresh preference capital. On a long-term view, that is most damaging to the capital structure of our industrial companies, because, if they fall on evil times, they have no cushion, as it were, by way of preference capital which they can pass. They are liable to be in queer street, and to have to put themselves in the hands of the banks.
At the moment, a company is almost forced by this tax to raise money by loan rather than by preference capital. Of course, they are not precluded in any way from raising ordinary capital, but it gives an immense fiscal encouragement to companies to incur debt to a greater extent than prudence and good management would allow. This anomaly is only an aggravation of a tax which is in itself a bad tax.
I would pray in aid some words used by the right hon. Gentleman the Minister of Local Government and Planning on the subject of this tax, and I think that all sections of the party opposite will like to agree with him, because, judging from his week-end speech, he is not only running with the Government hare but hunting with the Ebbw Vale hounds, which is, of course, very acceptable to

both sides. Some years ago when describing the tax he used these words:
It is a bad tax, a tax on risk bearing tending to divert the flow of capital from risky to comparatively safe investments.
We are continually told that one ought to be a merchant adventurer. But it is difficult to be a merchant adventurer when the dice is so heavily loaded against one by a bad and anomalous tax.
9.0 p.m.
It is doubly bad—and this is something which bears on all these direct taxes—for it is levied on paper profits and not upon real profits. I must recur for a moment to what the Chancellor said about this the other day, since with a terrifying display of synthetic anger towards me and some of my hon. Friends he said we were all wrong to talk about paper profits because the Millard Tucker Committee, whose Report he averred we had never read, said paper profits were true profits. They did not actually say that. They assumed that. What the Committee said, in paragraph 8 of their Report, was:
… we took as the first of those principles.…"—
the principles they were working on—
that as nearly as practicable the taxable profits should be no more than and no less than the true profits of the business as computed on established accountancy principles.
That is to say, they assumed that profits arrived at on established accountancy principles were true profits for the purposes of their argument. They went on to point out that these were not true profits at all in any real sense. Therefore, I hope that that argument will not be used from the Government Front Bench again.
The point I am making is that this high tax, aggravated as it is by the anomaly of preference distribution ranking for it, is doubly bad because it is raised on profits which are not true profits at all. The Millard Tucker Committee also examined the situation and said about it almost exactly what they said about every other problem they examined. They started by doubting whether it was in their terms of reference, then said it was a bad anomaly and something should be done about it and said they very much hoped that the Cohen Committee would do something about it. That, of course, is a very sound way of writing a report and gets one into very little trouble.
I urge the Committee to accept this Clause because I believe the present situation is getting out of hand. It is damaging to enterprise, it is damaging to the structure of company finance and it is in itself unjust.

Mr. J. Edwards: Before the hon. Member sits down, would he tell me whether he was purporting to summarise the Millard Tucker Committee Report on this particular matter in what he has just said?

Mr. Birch: Yes, indeed. I think it was a fair summary. I will read it all out to the hon. Gentleman if he likes.

Mr. Derek Walker-Smith: I rise to support the Clause which has been commended to the Committee with characteristic lucidity and persuasive force by my hon. Friend the Member for Flint, West (Mr. Birch). The Committee will recall that there were earlier passing references to this topic on the occasion of the debate on the Motion that Clause 24 stand part of the Bill. It was very disappointing that on that occasion the Chancellor made no reference to the observations that were made about the position of fixed preference dividends.
However, there was some encouragement to be had in that one of the embryo Chancellors of the Exchequer sitting on the back benches opposite, the hon. Member for Stechford (Mr. Jenkins), in the shortest and, as I thought, the best part of his speech on that occasion said there was something in the point that was made about the position of fixed preference dividends under Profits Tax. He expressed the hope that the Chancellor would consider their position. I hope that if other voices do not sound very sweetly on the ear of the Economic Secretary to the Treasury, the voice of his hon. Friend the Member for Stechford will reinforce them.
There was a good deal of reference on that same occasion to the percentage of profit taken by taxation, chiefly turning on the two extreme cases—either where all the profit was distributed or where none was distributed. Both of those cases are presumably unlikely cases, in that in the ordinary way some percentage of the net profit after taxation would be put to reserve. If only 20 per cent. of the net profit after taxation is put to reserve, which would be a modest amount

in an inflationary situation, my estimate is that in that case 64 per cent. of the chargeable profit would be taken by taxation, 7 per cent. would be transferred to reserve and 29 per cent. would be available for dividend. Of course, if a higher figure than 20 per cent. goes to reserve, then that figure of 29 per cent. is by so much the lower.
It is by no means improbable in a case of companies with a highly geared capital structure or with considerable arrears of preference dividends that the 29 per cent. will be wholly or very largely required for the payment of fixed preference dividends. That, of course, places companies in that position on the horns of a very painful dilemma. They must either prejudice the ordinary dividend or the reserves, or both; and when I say "prejudice the ordinary dividend" I am not talking in terms of prejudicing an increase in the ordinary dividend which might be said to be a counter-inflationary measure, but prejudicing its maintenance on the present level or even its very existence.
There are two questions which the Committee should bear in mind in considering this question. The first is whether the position is just in regard to companies at the present time, and the second is whether the effect on the future capital structure of companies will be economically advantageous. I want to say a few words on both those considerations. As to the justice of the present position, which has already been referred to by my hon. Friend the Member for Flint, West, broadly speaking it is right to say that when the law changes to the disadvantage of an individual or a company they have to put up with it; but there must be some limits to that doctrine. There must be some regard to the violence and the unexpectedness of the change.
When this matter was last debated, in the Finance Bill debate in July, 1947, the matter was comparatively unimportant because at that time the percentage of extra Profits Tax on distributed profits was only 7½ per cent.; it was subsequently retrospectively increased to 15 per cent., but it was only 7½ per cent. at the time when it was debated. It follows that the present position bears no real relationship to the position at that time; it was unforeseeable both at that time and at the time when many companies were raising capital.
A completely different situation presented itself to many companies when arranging their capital structure than what has turned out to be the case in this violent transformation in the course of four short years. The Committee are well aware of all the various disadvantages attaching to the raising of capital by way of debentures or loan capital and of the desire of a company to avoid, if it can, a charge on its assets and to avoid the various other disadvantages which apply to the issue of debenture shares.
But there can be no doubt that if the position could have been foreseen by many companies at the time when they made their decision, then the impact of the Profits Tax at its present level would have completely overwhelmed those other considerations which then seemed to be the strongest factors to be taken into account.
In the debate on the Motion that the Clause stand part of the Bill my hon. Friend the Member for Barnet (Mr. Maudling), recalled that one of the Law Officers of the Crown said, in the 1947 debate, that companies could change their capital structure if they wished to avoid these disadvantages, and my hon. Friend, with characteristic moderation, observed that he did not think it was as simple as all that; and in so doing, if I may respectfully say so, he was if anything guilty of some degree of understatement.

Mr. Birch: Meiosis.

Mr. Walker-Smith: If a company wishes to take that course it has to pursue a sort of obstacle race in order to achieve it, because it would entail replacing part of the existing share capital with loan capital. The company would encounter the difficulties of obtaining the sanction of the court under the Companies Act, there would be the difficulties of getting the approval of the Capital Issues Committee, and, finally, there would be the insuperable difficulty presented by Clause 28, which stands on guard against any such efforts that may be made in the future.
The position is now, therefore, that companies are bound to a course the hazards of which could not possibly have been charted at the time when they set out upon it. Hon. Members opposite may take the view that it is the business of

ordinary shareholders to take risks and that this is one of the risks they should bear, but I submit that it is the business of the ordinary shareholders to take ordinary risks and that this is an extraordinary risk quite beyond the contemplation of the parties, to use a phrase so common in our contract law.
Perhaps I may say a few words on the other aspect of the matter—whether the future economic consequences will be advantageous. My hon. Friend has already pointed out—as is the fact—that the necessary effect of this increase in the Profits Tax and of the Profits Tax position will be that companies will no longer have resort to preference share capital but will have resort to loan capital; and that will lead to the well-known economic and industrial disadvantages of companies being driven at the first time of asking, so to speak, to raising capital by means of loan capital, with all the various possible complications of appointments of receivers. debenture holders' actions, and so on.
It will, therefore, clearly be bad for companies, and I should have thought it would be bad for the Treasury, too, which may be an argument which will appeal more to the Economic Secretary; because if this is the effect, then the position of the Treasury will be that instead of getting 30 per cent. by way of Profits Tax at the old rate on preference dividends they will be getting nothing at all by way of Profits Tax on the debentures which, in the company structures of the future, are likely to replace a fixed preference dividend.
The Clause, in fact, embodies the first, and the better, of the two suggestions for dealing with this matter made in the Millard Tucker Report. Paragraph 323 of that Report says:
We have much sympathy with these views, but we regard the problem as falling outside our terms of reference. The suggestion that fixed rate preference dividends should be treated like debenture interest might indeed appear to he a matter for us as being a question of the proper deduction to be made in computing profits.
9.15 p.m.
They go on to say that they cannot make a positive recommendation, as my hon. Friend has explained, in regard to them, but it is clear to the average person reading their words, at least, I think it is clear—the Economic Secretary shakes his head; of course, a written document


speaks for itself; neither he nor I nor anybody else is capable of interpreting a written document—that if they had considered the matter to be within their terms of reference they would have considered this to be an acceptable and an equitable solution. Whether or not it was in the terms of reference of the Millard Tucker Committee, it is certainly within the terms of reference of this Committee, and I submit that we should correct this grave anomaly.

Mr. J. Edwards: I think we should be clear at the outset that the hon. Gentlemen who are sponsoring this Clause are, in fact, proposing that the charge of Profits Tax, now at 50 per cent. under Clause 24, on distributed profits, should not apply to fixed preference dividends, but that instead these amounts should be deducted in computing profits subject to Profits Tax. This is the most thorough going new Clause or Amendment that we have ever had on this theme. It goes much farther than anybody from the Opposition has hitherto proposed.
It is not clear from when this Clause would operate, but it is, I think, a radical challenge to the whole of the Profits Tax principle, and, if it were adopted, would, in fact, completely wreck the Profits Tax. [HON. MEMBERS: "No."] There are, it seems to me, very great anomalies created anyhow. After all, it is part of the scheme of the Profits Tax that the charge at the higher rate should fall on all dividend distributions, including payments of preference dividends. [Interruption.]
Perhaps, the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) would consider this point. If preference dividends were to rank as deductions in computing profits for Profits Tax purposes then, I think, he will agree with me, a company with a large preference share capital would be greatly favoured as compared with a company with a large ordinary and a small preference share capital. The truth of the matter is. I submit, that this is an extremely complicated matter, certainly not to be dealt with in the way which is suggested in this new Clause.
There were discussions several years ago between the Federation of British Industries and the then Chancellor of the Exchequer on the matter. Reference has been made to the Millard Tucker Report.

The hon. Member for Flint, West (Mr. Birch), gave what I thought was a somewhat tendentious summary of it. The hon. Member for Hertford (Mr. Walker-Smith) did something which, from my point of view, was much worse. He read three or four sentences from one paragraph and then stopped at the point most convenient to him. Perhaps I may be permitted to go on with the quotation from where he left off. The Report goes on:
The payment of preference dividends is, however, an appropriation of profits to a particular section of the owners of the business and starting from the premise that Profits Tax is a tax upon the profits of a company, we cannot agree that such dividends can properly be deducted in computing the amount of a company's profits. The suggestion is in reality one for a change in the nature of the tax, for it implies that the profits to be charged should not be the full profits of the company, but the ordinary shareholder's share (whether or not distributed) of those profits. It would clearly he outside our terms of reference to recommend so fundamental a change in the nature of the tax.
That seems to me important, and it bears out the point which I have already made, namely, that we are here concerned with a very difficult and extremely complicated subject, not to be dealt with in the somewhat superficial way proposed in the new Clause.

Mr. Walker-Smith: If the hon. Gentleman would allow me, I would observe that it just goes to show how very ill advised an hon. Member may be to have regard to the time of the Committee. I should have hoped that the hon. Gentleman would have known better than to suggest that I had deliberately omitted any part of a very lengthy paragraph in order to assist my argument. Since the hon. Member has chosen to make a reference, which I hope he will realise is unjustified and for which I venture to hope he may express some measure of regret, may I point out to him that I made it clear that the Millard Tucker Committee said in this paragraph that the matter was outside their terms of reference? The whole of the passage which he has read to the Committee, and which he has abused me for not having read, is merely leading up to that conclusion on the part of the Millard Tucker Committee. I stated the conclusions; I did not apprehend it was necessary to state every argument that they gave in support of it.

Mr. Edwards: I do not suggest for one moment that the hon. Gentleman wanted to conceal anything from the Committee, but the fact does remain that the Millard Tucker Committee confirmed precisely what I said in the part that follows the section which the hon. Member read to the Committee, namely that they were here concerned with a matter which they said was "so fundamental a change in the nature of the tax."
Quite apart from anything else, I must draw the attention of the Committee to the fact that the effect of this Clause would be almost to halve the yield and the amount net would be something like £31½ million, which, if there were no other grounds on which the Clause could be resisted, would put it quite out of count in our present circumstances.
I would not dispute that there is room for a good deal more thought and consideration about what should be a definition of profits. Hon. Members opposite talk about real profits. I would not dispute that there is a field of inquiry here of the utmost importance, and if ever we were to adopt the kind of principle involved in this Clause I suggest that we should only do it after the most mature and careful consideration.
I would not for one minute dissent from the view that there are genuine difficulties arising from the inter-relation between the financial structure of companies and taxation imposed, but this is a complicated subject, which is precisely the kind of thing on which we should look forward to having considered advice from the Royal Commission on Taxation. For those reasons, I ask the Committee not to agree to the Clause.

Mr. Lyttelton: What we have just listened to shows one or two very great errors in the mind of the Government. First of all, it shows a profound ignorance of the nature of preference shares. I will turn aside for a moment to say that any form of taxation that necessarily imposes upon companies a definite form of capital structure is in itself bad. Preference shares have only one merit in my opinion, and that is that they are irredeemable. If the hon. Member looks at the matter for a second he will find that most financial authorities agree with that. They differ in no respect from debentures except that they have no security. They are proprietary shares and no one invests

with the same confidence in preference shares if those preference shares are redeemable.
The Millard Tucker Report has something to say on this subject, and I hope I shall not be accused of taking sentences out of their context. It says:
It was represented to us that preference dividends, particularly where they are at a fixed rate and are cumulative, are much nearer to debenture interest than to ordinary dividends.
It is an unquestionable fact that when a business prospers a proprietor gets a preference dividend from his preference stocks at a fixed rate, but that when the business is not prosperous he gets no security. He remains the proprietor without the benefits. The only difference between the preference stockholder and the debenture holder is one of security.
Therefore, it seems to us—in spite of the Economic Secretary's view that this is a complicated matter and that we are waiting for the Royal Commission on Income Tax—to be a simple matter. In all equity, a fixed preference dividend ought to be treated as a charge against the business. Even the Millard Tucker Report, amidst a lot of waffle which it goes into on this subject, comes down clearly on the point that a preference dividend at a cumulative rate is much nearer to a debenture interest than to an ordinary dividend. I think that the ordinary man would agree with me.

Mr. J. Edwards: The right hon. Gentleman says that the Millard Tucker Report comes down on this point, but the section which he read said:
It was represented to us …
that is to say, a representation is recorded in the part which the right hon. Gentleman read. That does not necessarily mean that the Committee accepted the statement.

Mr. Lyttelton: The Committee was presided over by a lawyer. The hon. Gentleman is doing the profession a great disservice by suggesting that they ever come to a clear-cut decision. I have read it as a blunt man.
The other question which I want to raise very briefly is the arrears of preference dividends. There, again, is a general unfairness in trying to raise Profits Tax on what is a fixed interest bearing security, only differing in kind from


a debenture. The Economic Secretary ought to consider whether it does not seem a bit stiff that somebody who lends his money to a company and is out of his money for a long time should now be charged Profits Tax upon the distribution, when he has been without any dividend upon his preference shares for many years. I should have thought that the Treasury, instead of hiding behind a Royal Commission, would have given us a little more consideration, and I am disappointed. A clear case has been made out for some alleviation in respect of preference stock or shares.

Question put, and negatived.

First and Second Schedules agreed to.

Third Schedule.—(PROVISIONS TO GIVE EFFECT TO UNESCO AGREEMENT.)

The Secretary for Overseas Trade (Mr. Bottomley): I beg to move, in page 31, line 36, after "1948" to insert:
or by section fourteen of the Welfare Services Act (Northern Ireland), 1949, or any enactment of the Parliament of Northern Ireland replacing or amending the said section fourteen.
The purpose of this Amendment is to cover Northern Ireland.

Amendment agreed to.

Further Amendment made: In page 31, line 37, leave out from "organisation," to the end of the line.—[Mr. Bottomley.]

Schedule, as amended, agreed to.

Fourth Schedule agreed to.

Postponed Clause.—(PURCHASE TAX ADVISORY COMMITTEE.)

(1) For the purpose of giving advice and assistance to the Treasury in the exercise of their powers under section twenty-one of the Finance Act, 1948, there shall be constituted a committee to be called the Purchase Tax Advisory Committee consisting of a chairman and not less than ten or more than twenty other members to be appointed by the Treasury from persons who have industrial and commercial experience.

(2) Any body of persons representing any trade or industry or, at the discretion of the committee, any person may make application to the Purchase Tax Advisory Committee stating that the tax in respect of certain goods is having an injurious effect upon that industry or is against the national interest. The committee shall take the application into consideration and may make recommendations as they think fit, taking into account the effect of the tax on the industry making the application and on other industries that may be affected by any alteration and shall in particular consider the effect on the export trade.

(3) The members of the committee shall hold office for a period of three years and shall be eligible for reappointment from time to time on the expiration of their term of office. If a member becomes, in the opinion of the Treasury, unfit to continue in office or incapable of performing his duties under this Act, the Treasury shall forthwith declare his office to be vacant and shall notify the fact in such manner as they think fit, and thereupon the office shall become vacant. Any member may at any time by notice in writing to the Treasury resign his office.

(4) The committee may make rules:—

(a) for regulating the proceedings, including the quorum, of the committee; and
(b) for authorising the delegation of any of the functions of the committee to a sub-committee consisting of members of the committee.

(5) The committee shall have power to take evidence on oath, and for that purpose to administer oaths.—[Mr. Peake.]

Mr. Osbert Peake: I beg to move, "That the Clause be read a Second time."
This is the Clause which we agreed should be postponed. It provides that we should establish a Purchase Tax advisory committee. A similar Clause was put on the Order Paper last year, but it was ruled out of order under the Budget Resolutions which were adopted last year. This is the only opportunity we shall get during the Committee stage to say anything in general terms regarding Purchase Tax and the reasons which we put forward in support of our claim that the present position is very unsatisfactory and that a body such as an advisory committee is urgently required to deal with some of the difficulties which have arisen in regard to the tax.
9.30 p.m.
Purchase Tax was a war-time device—we never had it in peace-time—to induce people to postpone spending in the interests of the war effort. It was the ambition of all parties that as soon as possible after the war was ended the tax should be reduced and ultimately abolished. As recently as 7th April, 1948, the present Minister of Local Government and Planning told the House that he always took the view that Purchase Tax ought to be gradually, but not rapidly, reduced. The Opposition have gone further than that and have said that had we been in office during the last six years Purchase Tax would long ago have disappeared.
Nevertheless, the Chancellor now relies upon Purchase Tax for a very substantial amount of Revenue. The yield of the tax has grown from £118 million in 1945 to £310 million in the forthcoming year. It is now a Revenue tax, and it is levied on the whole field of consumer goods, with a few exceptions such as food, drink, tobacco, utility clothing and utility furniture and a certain range of household necessities. The counter-inflationary effect of the tax has been greatly diminished by the knowledge in the minds of the people that the tax has now come to stay. People now spend despite the tax and very often at the sacrifice of their savings, because at a time when the value of money is going down people prefer to own goods rather than Treasury notes.
Assuming that the tax is here to stay for some time, we must now look at its main faults and see what we can do by means of an advisory committee or otherwise to remedy or meet some of those defects. The main faults and difficulties of the tax are four. The first relates to classification. There are. so to speak, four grades of liability.
The Schedule to the Finance Act, 1948, endeavours to describe the whole range of consumer goods as at present known to mankind. Some goods are listed as exempt from ax, others as subject to the 33 per cent. rate, others as subject to the 66 per cent. rate and others as subject to the 100 per cent. rate. The distinction between the articles that fall into those different grades of liability is in many cases quite arbitrary.
Many goods fall accidentally into two grades or more. For that reason there is a provision in the Act that if goods are to be found in more than one class they shall be deemed to be in the class which bears the higher rate of tax. The Schedule to the Act of 1948 contains a great deal of mumbo-jumbo quite incomprehensible to the ordinary person. There is an example in a Schedule to the present Bill; I quote from the third paragraph of the Fifth Schedule:
In Group 6, there shall be added at the end the following paragraph:—?(p) knitted unbleached cotton cloth made with at least one needle omitted in every 50 needles…'
Presumably those words mean something to someone, but I must confess they mean absolutely nothing to me; nor, I suppose,

do they mean anything to any except a very few Members. If you, Sir Charles, read through the Schedule to the present Bill you would find a great deal which would cause you amusement but which, I am quite sure, you would not be able to understand.
This classification of goods into four divisions is carried out by the Board of Customs and Excise in conjunction with the Board of Trade. It is perfectly arbitrary and there is no appeal to anybody from their decision. I wish to tell the Committee of an example which came to my notice. A constituent of mine, a carpenter, established himself in a small way of business to make what was passed by the Board of Trade as a utility bookcase. He bought a great deal of plywood and a certain amount of machinery and put about £2,000 savings into this business. Within three months of the business being established the Board of Trade reversed their decision and said the article was no longer a utility bookcase and was subject to 33 per cent. tax. Within six months my constituent was ruined. His savings were gone and he was back as an ordinary weekly wage earner. I say it is wrong that that sort of thing should happen without there being any appeal to an impartial expert body.
The second difficulty about Purchase Tax is its effect upon the production of quality goods and upon British skill and craftsmanship. It surely must be obvious that if we are to continue to exist in this country we must have a large export trade. If we are to export we must produce goods of the very highest quality. If there is no home market allowed for goods of the highest quality, because of a crippling Purchase Tax, it is certain that sooner or later the producers of these goods will move overseas to be nearer the markets remaining to them. There have been in recent years some signs that the Chancellor of the Exchequer does appreciate the evil effects both on our export trade and upon our war potential of very high taxation on what are considered to be luxury goods, but which are in fact goods demanding great craftsmanship and skill in their manufacture.
The third point about the tax is its uncertainty, and the frequent changes in classification in the rates of tax applicable to a given article. Many of my hon. Friends can give instances where the rate


of tax has been moved up or down quite arbitarily five or six times in the short period which has intervened since the war. Trade can flourish if it knows what the situation is, but trade cannot flourish in the state of uncertainty to which trades are subjected by the operation of the Purchase Tax as it operates today. The fourth, and, I think, the greatest, difficulty is the Parliamentary difficulty, the difficulty in which this tax puts us in the House in giving adequate discussion to it without creating a wholly impossible situation.
Many of our constituents are affected by the tax. Many of them produce articles which are subject to the tax. It is natural that we should be subjected to pressure from groups of all kinds seeking to get the rate of tax reduced or the tax abolished upon the articles in which our constituents are interested. It seems to me, therefore, that we cannot open the whole field again, as we did up to, I think, 1949, to a full discussion of every detail of the Purchase Tax during the Committee stage of the Finance Bill.
What was described by my friend the late Mr. Oliver Stanley as the "annual Dutch auction" on the Purchase Tax Clauses reached its zenith in 1946, when the then Chancellor of the Exchequer, the present Minister of Local Government and Planning, announced at the beginning of the debate on the Schedules that he was prepared to give away £6 million in tax reductions that year, and he invited hon. Members in every quarter of the Committee to contribute their suggestions. After that, Sir Stafford Cripps came to the conclusion that that could not go on, and I think it was in 1949 that the Budget Resolution prohibited all discussion of Purchase Tax of any sort or kind. Last year, we were allowed to discuss only the three main rates of tax, and none at all of the details. This year, we have a third device; the Chancellor allows us to discuss those groups, and then only to a limited extent, which are affected by his own Schedule to the Bill.
It seems that we really do not know where we are going in this matter of discussion of the Purchase Tax. We propose that an advisory committee should be established. Some of my hon. Friends were much attracted by the idea of making this Committee analogous to the Import Duties Advisory Committee,

which was established under the Import Duties Act, 1932. That small, judicial body had mainly to decide issues between one body of traders and another, those who wished to import goods free of duty and those other traders who wished to secure a measure of protection. They had to administer a 10 per cent. flat-rate tariff, with a possible higher rate in individual cases, and it was very rarely that they came up against a question where the consumer was directly interested.
I remember one occasion when the question of the tariff on electric lamp bulbs became rather an active political issue, but broadly speaking the Import Duties Advisory Committee took the question of import duties out of politics, and they were extremely successful in that way. This Committee did a great deal to reduce political pressure upon Members in particular interests.
9.45 p.m.
My right hon. Friends and I do not altogether think a body of that character is quite required in the case of the Purchase Tax. The Purchase Tax problem is far more complex. There are these four grades of liability varying very widely in the incidence of the tax. Moreover, the consumer is directly affected and the issue is more one here between the consumer on the one hand and the Exchequer on the other. We therefore propose that the advisory committee should be larger and have more direct knowledge of the trades and industries of the country.
We propose a body with from 10 to 20 members, persons who have industrial and commercial experience. That clearly does not rule out the appointment of trade union representatives to the committee. I do not suggest that this Clause is perfect or that it will get rid of all the difficulties inherent in the Purchase Tax, but I do say as regards classification and description, as regards the effect of tax on the highest quality goods, and as regards questions of exemption and so on, this committee could give useful advice to the Chancellor.
It would not sit in public; the Import Duties Advisory Committee did not sit in public, but the fact of an application being made to it would be published and the committee's report would be published at the same time as any order made


by the Treasury in fulfilment of the advice of the committee. I say once more that I do not pretend this Clause is perfect and would welcome suggestions by hon. Members in all parts of the Committee as to what they think best for this body, but, until we get some body of this kind, we shall not get rid of the many anomalies, difficulties and hardships to which the Purchase Tax gives rise at present and we shall do nothing to get rid of the constant pressure which we feel as Members of this House.

Mr. Gaitskell: The right hon. Gentleman has moved this new Clause—

Mr. Peake: On a point of order. Has the new Clause been put to the Committee, Major Milner?

The Chairman: Yes, it was read the First time yesterday.

Mr. Gaitskell: The right hon. Gentleman spoke in support of the new Clause in a speech of a moderate kind and freely admitted that there were certain difficulties about the particular proposal he put forward and I will try to respond in the same spirit.
He criticised the Purchase Tax on four grounds and I wish to say a few things about those criticisms. His first comment was the difficulties in which we get involved by trying to apply different rates of tax to different commodities which involve us in special complications as regards definitions, and so forth. The reason why we have different rates of Purchase Tax is fundamentally that we want to make this tax as progressive and as little regressive as possible. When the tax was originally introduced in 1940 it was a flat rate of tax and, therefore, we would argue, of a much more regressive character.
I would have thought the Committee generally would favour the broad idea of trying to limit this tax as far as possible to luxuries and if we could not limit it completely to luxuries, at least applying different rates of tax to commodities according to the degree of their essentiality. If we accept that principle, we are bound to have difficulties of this kind. The Customs are, of course, constantly trying to improve the grading to get over these difficulties, but I freely

confess that anomalies remain. We have never for one moment denied that, but all I say is that I do not think we can avoid them altogether if we have different rates, and I certainly would say that the tax ought to be on different rates.
His second argument concerned the repercussions which the tax had on the production of quality articles for export. I will leave that subject for a moment and return to it later as it merits special attention. Thirdly, he criticised the uncertainty. That is not something inherent in the tax. It has arisen from the fact that changes have been made, but one could perfectly well imagine a Purchase Tax without making changes so frequently as they have been made. I do not think that hon. Members opposite have complained where the tax has been reduced. The uncertainty there may have been a nuisance, but it was more welcome than the certainty of the tax remaining at the higher level. As I say, I do not think that is a fundamental criticism of the tax itself.
I want to add this. The right hon. Gentleman rightly said that the tax was now mainly a Revenue tax. That is perfectly true, and we should not forget that we raise over £300 million in this way and that it is not so easy to find other ways in which that money could be raised. However, in my Budget speech I pointed out that we also defended this tax on specific articles on the ground that we sometimes wished deliberately to restrict, to diminish, the home consumption of these articles. Indeed, that was our case this year for increasing the tax on a number of metal goods, the production of which, in our view, was likely to compete and conflict with the defence programme. That, no doubt, gives rise to perhaps a rather more frequent change of tax rates than would otherwise be the case.
His fourth criticism, the Parliamentary difficulty, is one which he will probably agree is not really met by the proposal in this Clause. I do not think the existence of an advisory committee composed of 10 persons drawn from industry would help the House in any way. It is quite true that it is intended to be a body of persons to whom traders and manufacturers may go and present their case, but the right hon. Gentleman has just told us that he conceives of this body as meeting in secret. There would be therefore, no


opportunity for public discussion of their complaints, which I should have thought was what the right hon. Gentleman primarily had in mind when he was pointing out our Parliamentary difficulties.
The general economic case for the Purchase Tax is well known to the Committee and it is not necessary for me to labour it tonight. We raise £300 million of revenue by it, and we need, in particular cases, to restrict civilian demand in the home market. It is not the only way, of course, in which demand can be restricted. We try to do that by monetary policy and by various other anti-inflationary devices, but this happens to be one way in which that effect can be achieved.
But there is here a clear conflict of view—here I come back to the second criticism made by the right hon. Gentleman—between those who say that Purchase Tax is a bad thing for the export trade and those who say, "On the contrary, Purchase Tax by keeping down deliveries and demand in the home market actually manages to boost up the export trade."

Sir H. Williams: Very few.

Mr. Gaitskell: On the contrary, I think there are powerful arguments in favour of that and, if the hon. Gentleman will listen, I will explain what I mean. The fact is that if there is only so much available in the way of production, if we are already operating under conditions of full employment—or, as some people have sometimes described it, as over-full employment; if, therefore, the total output is not to be increased any further, it seems to be fairly clear that if we increase the total consumed in the home market we shall not be able to sell so much abroad. Equally, if we cut down the amount going to the home market, provided the export demand is there, as in present circumstances for the most part it certainly is, then I do not think that there is very much doubt that the export trade benefits. If one challenges that argument, one is really challenging any attempt to restrict demand generally in the home market for consumer goods.
I should have thought that the Committee were agreed that in an inflationary period, when we were worried about our balance of payments, it was bound to be a cardinal feature of the Government's policy, and it must be right, to do every-

thing we can to reduce the pull of the home market to keep up exports to the maximum level. The conflict between these two points of view probably arises from the fact that, in the one case, the matter was looked at from the point of view of the individual firm only. Naturally they think, "All right, if we can have a large sale in the home market we will produce more; we will produce more for the home market and for export as well."
If there is spare capacity available, I concede that it might be possible to produce more at lower cost, but if in fact, taking that industry as a whole, no more material or labour is available, obviously we do not get the result of larger exports and larger supplies to the home market at the same time. So far as this proposal is concerned, as the right hon. Gentleman has said very fairly, what is involved is not really the kind of problem which the Import Duties Advisory Committee had to deal with in the 1930's. The Purchase Tax is, after all, primarily a revenue duty. It is because of the revenue that it brings in that we are mainly interested in it from the Exchequer point of view.
Therefore, any committee concerned with this problem will not be like the Import Duties Advisory Committee, a judicial body or a semi-judicial body deciding between the different interests—between the interests of the manufacturers who are seeking protection and the interests of those who consume the products of the manufacturer. I do not think that there is any difference between us when I say that in the main it will be an issue between the producers and probably the consumers as well on the one side, and the Crown and the Exchequer on the other.

Colonel J. R. H. Hutchison: Does not the right hon. Gentleman think that an advisory committee consisting of business men of this kind would be valuable to him in that connection in certain trades where already he has run into the law of diminishing returns and where, if Purchase Tax was lower, the result to the Revenue would be greater?

Mr. Gaitskell: If the hon. and gallant Gentleman will wait, I will come to the types of committees and what they might do.
This is really an issue between the producers and the consumers, on the one side, and the Crown and the Exchequer, on the other. Nevertheless, the right hon. Gentleman draws the conclusion that a committee of the kind he indicated would be of value to us. We would never wish to neglect any sensible and helpful advice which we might receive on these matters. But I draw quite a different conclusion.
It seems to me that a committee of the kind indicated would be not much more than a kind of buffer between the Customs and the Treasury, on the one side, and the particular industries, on the other. At present the industries come to us and put their point of view and we have to decide the matter. We have to decide it in the light of the national picture as a whole. Often, there may be arguments which are strongly in favour of the industry concerned.
For example, an industry may feel that it is being adversely affected by the tax and that it will not be able to sell as much at home as it would wish to. But it may be in the national interest that it should not sell so much at home. It may be desirable that the labour, and perhaps even some of the capacity of the industry, should be turned over to defence, or the industry may be encouraged to go in for a larger sale of exports.
The committee would either be a sort of buffer between us, which seems to be unnecessary, or else it would become nothing more than—and I do not use the word in an offensive sense—a pressure group which would all the time be demanding from the Government reductions in taxation. That, no doubt, may appeal to the Opposition, but, as such, it makes no great appeal to the Chancellor of the Exchequer.
10.0 p.m.
The point is surely this. The issue which we have here to decide is at what level Purchase Tax should be applied to different commodities. Whether or not it should be applied to different commodities seems to me to be essentially Budgetary and policy matters, and they are, therefore, matters which the Government must decide and must defend. I do not think it would be at all appropriate that we should have a committee either to act as a buffer between us and the trade, particularly if meeting in secret,

or as something behind which we might hide, or again if it worked out differently, as I think it would, as a kind of pressure group upon us.
Therefore, while I do not myself agree that a standing advisory committee of the kind suggested in this Clause is suitable—indeed, I think it would do more harm than good—that does not mean that I think that no problems are involved here. I recognise that, from time to time, problems which deserve special examination may be thrown up in connection with the Purchase Tax, and I have in mind here not the tiresome but, when all is said and done, not very important problems of definition, which give us the opportunity of listening to entertaining speeches from time to time, but the really vital things which seem to call for examination.
One of these, for example, is in regard to the effects of the Purchase Tax in fields where utility schemes operate. I draw a distinction quite deliberately there from the problems to which, for instance, the F.B.I. pamphlet draws attention and which have been represented to us. What is perhaps even more important is that strong criticisms have recently been levelled at the United Kingdom by certain countries which wish to import into this country and sell their goods to us, because we have failed to exempt from Purchase Tax various goods which they produce of a similar type and quality to home-produced utility articles.
This is a matter to which we have been giving a good deal of thought for some time, and I am bound to say that the more we have thought about it the more apparent it has become that it is not easy to handle the imports problem, in particular, the problem I mentioned just now, in isolation from rather more general and wider aspects of the present system.
I mentioned just now that there had been representations from trades and industries. In particular, it has been emphasised that the sudden jump from Purchase Tax exemption on utility goods to full Purchase Tax rates on similar goods which are just above the utility range causes difficulties in manufacture and has rather specially adverse effects on the export trade. We feel that these problems do need special examination, and, although we cannot accept the kind of standing advisory committee suggested in the Clause, we have decided to set up


immediately a special ad hoc committee to examine the present system of Purchase Tax on those classes of goods within which utility schemes operate, to recommend how that system can be improved, both in the interests of consumers, manufacturers and exporters, and in relation to our international obligations in respect of imported goods.
I must emphasise that this is not a standing advisory committee, but an ad hoc committee for a particular inquiry, and it will be asked to examine and report on a particular problem or groups of problems. I must emphasise, too, that this work will be confined entirely to those fields within which utility schemes operate, and, last but not least, it will be instructed, in seeking a solution to these difficulties, to pay special attention to the importance of maintaining the present very great advantages of the utility scheme to consumers, which we must not forget, and which, indeed, in present circumstances, seem to me to be even more important than they were perhaps a year or two ago. Also, of course, they will have to have regard to the revenue aspect of the problem. We cannot afford, as the Committee will well understand, losses of revenue from the classes of goods in question.

Mr. Lyttelton: Mr. Lyttelton rose—

Mr. Gaitskell: I am just finishing, if the right hon. Gentleman will allow me to proceed.
That, therefore, is what we have decided to do, and I hope that within a very short space of time it will be possible to announce the terms of reference and the membership of this committee. That is why I am afraid I cannot accept the proposal in the new Clause, but, as the Committee may agree, we are, in fact, proposing to do something which I think probably covers a certain number of the difficulties and problems as a result of which the new Clause was originally put down.

Mr. Lyttelton: I only wanted to interrupt the right hon. Gentleman to say that I have no doubt it has been for the convenience of the Committee that he has deployed a number of arguments which were totally irrelevant to the subject before us. He has, in fact, used the opportunity of our Clause to propose

something which has nothing whatever to do with the subject now before the Committee. He has admitted that it is something quite different, and I must at this point draw the attention of the Committee to that fact. It really has nothing whatever to do with our Clause.

Mr. Gaitskell: Whether it has anything to do with the new Clause or not is, no doubt, for the right hon. Gentleman who drafted the Clause to say. I have no doubt myself that what we propose to do by our committee is related at any rate to some of the difficulties which have been in the minds of industry and commerce on this matter. As to the irrelevance of what I said, I must point out to the right hon. Gentleman that in the greater part of my speech I was replying to the arguments deployed by him.

Mr. Black: I think the Committee will feel profoundly disappointed with the reply given by the Chancellor. As my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has pointed out, the suggestion made by the Chancellor is really no answer whatever to the scheme which we on this side of the Committee advocate, and which is outlined in the new Clause we are now debating. The reasons given by the Chancellor for his unwillingness to set up a Purchase Tax Advisory Committee may really all be summed up in the phrase that he believes the gentleman in Whitehall knows best, and that therefore there can be no value in, nor wisdom to be drawn from, the consideration of this problem by the kind of committee which we desire to see established.
The Chancellor referred to the fact that a great many of the difficulties which arise in this matter are occasioned by the different rates of Purchase Tax, namely, the three classifications of 33⅓, 66⅔ and 100 per cent. He expressed the opinion that these different rates were in the national interest and that it was the desire of the Government to use these different rates in order to make the tax a progressive one. I think that anyone listening to that statement might still feel in very great doubt as to the principles which have been applied in deciding into which category particular goods should fall, because I believe that anyone examining the Schedules in any detail will find it extremely difficult to discover any underlying principle at all.
I think we are entitled to ask on what principle the classification has been carried out. The Chancellor has indicated that the principle is that the more necessary and the more socially desirable goods are classified at the lower rates, while the less necessary and less socially desirable goods are classified in the higher categories. He used the phrase that the different rates of tax were consciously and purposely employed by the Government with the intention of restricting the sale of some classes of goods which it was considered in the national interest to restrict.
But I think that kind of principle is very difficult to detect in the actual classifications themselves. I think hon. Members are entitled to inquire why roulette boards carry a tax of only 33⅓ per cent. while photographic apparatus carries a rate of 66⅔ per cent. Is it that roulette boards are considered to be more necessary and more socially desirable than photographic apparatus? Again, we find that hair-waving machines—

The Chairman: We cannot go into the merits of all these different commodities. The question is whether a committee should be set up and what form it should take. We shall be here all night and all day tomorrow if we go into all these things.

Mr. Black: I appreciate the point you are making, Major Milner, but surely the whole case for the setting up of the kind of advisory committee we seek to have set up rests upon the fact that in our view there is a hopeless tangle in the present classifications and it is with a view to curing, or at any rate in part overcoming, that tangle that we have selected an advisory body as the best means of achieving that end.
I will, of course, bow to your Ruling, Major Milner, but I hope you will permit me by way of illustration to take not more than two other cases, because it seems to me it is very difficult to examine this matter purely in the abstract without any reference to any particular instances. If I may content myself with taking only two further examples, I will then leave that aspect of the matter. On this principle of more essential goods carrying the lower rate of tax, why is it that hair-waving machines are taxed at 33⅓ per cent. while chin straps for treat-

ing double chins carry 100 per cent.? Why is it that cinematograph films containing pictures for exhibition are exempt while gramophone records carry a rate of 66⅔ per cent.
These are the very kind of cases on which we on this side of the Committee base the view that the present Purchase Tax position is one of hopeless chaos, and we arc bringing forward as a constructive measure the setting up of an advisory committee to go into these obvious inequalities and inconsistencies and to advise the Government upon them. I submit there is the strongest possible case on the ground of inconsistency in the present position for doing something of a much more useful and widespread character than the course which the Chancellor has suggested and which, as has already been pointed out, is really no answer at all to the fundamental problem.
10.15 p.m.
I would ask that this matter be considered from the standpoint of the trader who is engaged in a business in which goods are being manufactured or sold which are subject to Purchase Tax. It is time that Parliament paid some little attention to the position of the trading community in all its difficulties in matters of this kind.
May I draw the Committee's attention to the fact that the most important document, although not by any means the sole document, that governs this matter with which presumably every trader is expected to be thoroughly familiar, is Document No. 78, "Notice by the Commissioners of Customs and Excise." What is the character of this document? It contains 87 closely printed pages. A good deal of the matter is in heavy type in order to indicate that part of the document which deals with the statutory conditions applicable to Purchase Tax, but the major part of the document is in light type containing the explanatory notes.

Mr. Ellis Smith: Read it out.

Mr. Black: In addition to 87 pages in this very interesting document, we find on page 2, at the introduction to the explanatory note, this statement:
These lists are, of course, not exhaustive and there are many articles not mentioned which are covered by the statutory headings


and therefore chargeable with tax. Also, articles listed as not chargeable under one Group may in some cases fall within another Group and be chargeable accordingly.
I desire to take one further illustration of the difficulties to which the trading community is subjected in this matter, and I want to read a brief quotation from the Board of Trade Journal of 9th June of this year. May I point out that recently the Budget granted exemption in the case of pins of base metal. One would have thought that that was a comparatively simple and straightforward matter in respect of which to grant an exemption, but here we have a Purchase Tax announcement made in the Board of Trade Journal in the following terms:
The Commissioners of Customs and Excise have had under consideration the effect of the Budget exemption for 'pins of base metal' on the treatment of hatpins, i.e., articles with sharp points whether or not protected by a removable cap, including those which serve the dual purpose of hat pins and hat ornaments. (Articles with blunt, e.g., screw, ends and articles having heads at both ends of the pin, are not regarded as hat pins.) As a con cession, on 'de minimis' grounds, the Commissioners will be prepared in future to regard the exemption as covering (in addition to hat pins which are wholly of base metal), base metal hat pins with single small heads of glass, plastic or other non-precious material, of any shape or design not exceeding half an inch in any dimension. Where the glass, etc., head is larger than half an inch in any dimension, the article will not be regarded as falling within the exemption and will be chargeable at 33⅓ per cent. or 100 per cent. under Groups 4, 26 or 29 (a) of the Tax Schedule, as appropriate.
Is it reasonable at a time like this, with all the difficulties which confront the business world, for harassed and overburdened traders to have to spend a substantial amount of time in studying this continual outflow of documents dealing with this particular matter which I submit not one trader in a hundred is really capable of fully apprehending or understanding and on which it would be very difficult in many cases for him to obtain authoritative or definite advice from legal advisers whom he might consult?
I suggest that on this ground, apart from the many other grounds which have been mentioned—namely, the ground of trying to do something to help a section of the community which is already overburdened with the multifarious restrictions which afflict the business community today—the case is overwhelming for the setting up of an advisory committee to try to bring some order, some

clarification, some simplification into what at the moment is nothing more or less than a mass of inconsistencies. I hope the Chancellor will heed our appeal and agree to set up such a body.

Mr. Oakshott: I am sorry that the Chancellor has not so far found it possible to accept the arguments of my right hon. Friend the Member for Leeds, North (Mr. Peake) and other hon. Members in favour of the formation of this committee. I should have thought that a committee of this sort could have been the greatest possible help to him and his advisers.
In considering Purchase Tax and its effects, I think we often tend—as I think the Chancellor himself did just now—to concentrate on the effect of the tax upon the consumer. This proposed committee would direct its attention to industry, to the manufacturer, to the distributor, to the retailer; and it is with regard to the distributor and retailer that I want to say a few words tonight.
The new Clause mentions matters which could have "an injurious effect upon" trade. In that connection I should like to indicate a problem which is of the sort which this committee would try to consider. They could, perhaps, try to evolve some system whereby traders could avoid loss arising from a reduction in the rate of Purchase Tax or from an exemption from Purchase Tax for certain class of goods on which they had already paid tax and which they had in stock in their shops.
It is known that this is an old grievance. Severe losses have been caused to a number of traders because so far no method has been provided whereby they could have a refund of the tax which they had already paid. Hon. Members on both sides of the Committee have worked on this problem in the past. There have been a series of discussions, in some of which the Financial Secretary has himself taken part. As far back as 1949 the Chancellor of the Exchequer, in the Budget debates, said he would try to work out some method to meet this problem. Representatives of the Treasury and of the Department of Customs and Excise have met representatives of trades and industries to discuss the problem, and I think in the past the Government have been not unsympathetic towards them.
So far, however, the discussions have not achieved any noticeable success. There are, I agree, very great practical and administrative difficulties involved. The Financial Secretary has described it as a thorny problem, but that is not a good reason for perpetuating an obvious injustice whereby traders suffer losses which they cannot avoid by any means within their own control and which no amount of business foresight can prevent. All sorts of traders, both large and small, suffer from this injustice, and perhaps some of the small traders suffer most. I know of a case in my constituency where a small shopkeeper has made—

The Chairman: Order. We are not, of course, discussing Purchase Tax generally, but are discussing the setting up of a committee.

Mr. Oakshott: I was trying to give an example of the sort of thing with which a committee of this kind could try to deal. I know of a small man in my constituency who has a very small stock-in-trade, who, as a result of the reductions and exemptions in this year's Budget, has calculated that it is going to cost him something between £150 and £175 a year, so that he has to make over £3 a week through the year before he can be in the same position as that in which he would otherwise have been. In a small village shop £3 a week takes a lot of making.
The Financial Secretary on an earlier occasion—I think it was in 1949—said that it was a mistake to assume that there would be an immediate mark-down in prices if there were reductions in or exemptions from Purchase Tax. I simply cannot agree with him about that. I think that the British public are far too much on the qui vive these days over prices, and I think that the mark-down will be immediate and that prices will be reduced at once, and that shopkeepers and retailers will suffer losses, as soon as there is any reduction in Purchase Tax.
The discussions that have taken place so far on this matter have not led to anything, but we cannot leave it there. I think it is most necessary to keep on trying to find some solution of what is a real injustice and hardship to these people. I think that the type of advisory committee suggested in this new Clause is the sort of body that would have a

real chance of success in meeting this sort of problem, and that that is one more consideration to add to the very powerful arguments advanced by my right hon. Friend the Member for Leeds, North, and other hon. Members in favour of the formation of a committee of this sort. I hope that the Chancellor will reconsider the matter.

Mrs. Castle: I am very glad that the Chancellor of the Exchequer has resisted this proposal for a Purchase Tax Advisory Committee, and I hope that he will go on resisting it. I really am very surprised that hon. and right hon. Gentlemen opposite should expect us not to see through the political colour of this suggestion, in spite of all the technical arguments that have been brought forward in an attempt to blind us.
Surely anybody with any respect for Parliamentary institutions must agree that it would be quite intolerable to have the discussion of Purchase Tax taken from this Committee, which is representative. [Interruption.] Some hon. Gentleman says we have been muzzled, but I do not notice that hon. Gentlemen are being muzzled at this stage. Certainly their proposal would rob this Committee of any discussion whatsoever
of Purchase Tax. [HON. MEMBERS: "No."] Oh, yes.
The whole idea of this suggestion is that the discussion of the details of Purchase Tax should not take place on the Floor of the Committee but should take place in some secret body representative of industrial and commercial interests who would consider the Purchase Tax in the light of its effects upon their own industrial interests and upon the national interest as interpreted by them. Really, such a body would be only an annexe to the Conservative Central Office, and would be an extension in the Purchase Tax field of the aims of industry.

Mr. Odey: Would not the hon. Lady agree that this Committee has not had the opportunity of discussing the details of Purchase Tax for the last three years?

10.30 p.m.

Mrs. Castle: I see upon the Order Paper a lot of details about Purchase Tax. In any case, the argument still


remains that it would be in this advisory committee that taxation would be discussed which falls upon all sections of the community. Surely it is quite wrong to have an industrial Star Chamber where pressure could be brought to bear by sectional interests in order to obtain alterations in taxation which directly would affect the standard of living of the mass of the people. When we get attempts to relate Purchase Tax to the needs of the mass of the community, when year after year since 1945 the Government have looked at this tax from the point of view of lifting the burden from where it should be lifted, it is obvious that alterations of that kind will cause some anomalies, particularly in the fields where they are of little importance.
We read in the daily papers and in popular Conservatively-minded magazines about Purchase Tax anomalies, in the field of fancy goods. What is this advisory committee going to do? It is going to come along and say that the 100 per cent. Purchase Tax on this or that should be removed. At this moment, when the housewives are faced with matters of urgency over necessities, are we to start bringing pressure to bear for the adjustment of anomalies on fancy goods, which might cost many millions of pounds?
This is another of the manoeuvres we have had every year by hon. Members opposite to lift Purchase Tax, not from those essential articles from which Labour Chancellors have lifted it, but from luxury goods. One of the first things about which a private committee considering recommendations on Purchase Tax on the export trade will make representations is non-utility clothing and garment cloth. Hon. Members can make a burning argument about the effect of Purchase Tax on the export trade in these goods, but that is one of the most important revenue raisers. The Treasury receive no less than £80 million a year from that item alone. Are we to have decisions of that kind made by a lot of closed-shop industrialists? That kind of discussion and that kind of decision should be taken in this Committee and nowhere else.
In conclusion, I would say, looking at the Amendments to the Schedules which we shall discuss later on, that I am very interested in the Conservative idea of

what is in the national interest. Apparently they think it is in the national interest to exempt from Purchase Tax fishing tackle, fishing bags, golf bags, cartridge bags and brushes and combs, not for human beings, but for animals, and in their view it is in the national interest that Purchase Tax on motorcars should not be increased.
Let us face the fact that our discussions on Purchase Tax remain primarily political discussions. We on this side have sought all along to temper the winds of post-war difficulties to those who are desperately in need. This moment of all moments is the time we should face up to these decisions in this Committee and not hand them over to industry with its private and sectional interests bringing pressure to bear on these matters.

Colonel Gomme-Duncan: Before the hon. Lady sits down, may I ask her whether, if this is only an advisory committee, there can be a closed shop? If it is only to advise, where is its executive action?

Mrs. Castle: I am glad that question has been asked. Clearly if it is to be an advisory committee, then none of the advantages that have been brought forward will arise. If it is merely to be a body making recommendations, one gets no further forward.

Sir Arthur Salter: Let me say at once that the hon. Lady is completely mistaken when she suggests that we are deciding that responsibility should be handed over to the advisory committee and deprive Parliament of its present rights. She has really misunderstood the purpose of the new Clause. I thought that we were going to have an interlude in the kind of debates we have been having in the past few days and weeks, where we have been criticising certain tax proposals and principles.
Here we are doing no such thing. Here our purpose is not to say that Purchase Tax is a bad tax and ought to be abolished. We are not challenging the scope and magnitude of the tax. We are assuming that Purchase Tax is here to stay for some time and on a great scale. We really are attempting to make a contribution to what is an administrative problem. We do not for a moment propose, in suggesting a committee of this


kind, which is quite definitely an advisory committee and will only make recommendations, that the Government or Parliament should abrogate their powers of decision.
Nor do we think that as an advisory body it can cover every aspect of the problem of Purchase Tax. We fully realise that, apart from the difficulties of classification and anomalies on which industry and commerce are the people best able to give expert advice, there remains the question of the ultimate balance of the interest of the Revenue and the hardship imposed on the individual citizen. Of course, the Chancellor of the Exchequer has to retain his responsibility and Parliament must retain its responsibilities and rights.
If the proposal were adopted, there is no occasion and no opportunity that Parliament now has under the existing procedure of pressing the interest of particular classes of housewives or other individual citizens which would be removed or impaired by our suggestion. But among the considerations and difficulties that the Chancellor must have in mind is the whole range of anomalies, of difficulties of definition and the impact of a particular kind of tax and classification, with its frontiers drawn as at present on the export trade in general and the development of production and sale.
These difficulties remain. The question really is how best they can be dealt with, and it is on that that we want to make a positive suggestion: The hon. Lady talked as if we were trying to create a Star Chamber complete with special powers because we said we thought that this body should consider in private and receive representations in private, although its recommendations should be made public with the decisions of the Treasury. But does she think that the Chancellor of the Exchequer does not consult representatives of different trades, industrial and commercial experts, and consult them in private? Of course, he does; he must.
Our proposal is simply that, instead of this separate, improvised consultation, there shall be something more enduring and of a wider scope. In regard to consultation which is not public at the time when it takes place, that happens

now, and must happen in any case. Our suggestion really is, not to propose something completely different from what is happening now, but to institutionalise one part of the advisory machinery to which the Chancellor of the Exchequer already resorts.
We all listened with great interest to hear the Chancellor of the Exchequer's new proposal. I had been hoping that it would have been wide enough for us to say, "That covers so much of our ground that we need not press our own proposal." I have been very disappointed that what the right hon. Gentleman has proposed is so temporary in character and so narrow in scope. I do not believe that the Committee can have listened to the speeches made from this side of the Committee today without realising that there is a great number of difficulties of classification, and of the impact of a particular classification upon the export business, which did not come within the scope of his committee. As I understand it, his speech is confined to cases where there is an impact upon utility production and the utility schemes. We want something much wider.
I think that the Chancellor rather mistook our purpose when he said that my right hon. Friend had made certain criticisms of the Purchase Tax. My right hon. Friend referred to certain difficulties as the basis of his proposal for an addition to our administrative machinery. The right hon. Gentleman, referring to my right hon. Friend's points, told us that uncertainty, for example, necessarily arose when one made changes, and that no one objected when the changes were in one direction, namely, a reduction. But is it not the case that when we look back over the history of Purchase Tax we see that the movement has not been either up or down, but has been of a switchback character, and we can say that it has been unnecessarily of a switchback character.
The Chancellor of the Exchequer said that our proposal seemed to be based upon the idea that Purchase Tax, as such, is a tax bad for exports. That was not our argument. Our argument was that, although in certain respects, as the Chancellor of the Exchequer explained, it might even help exports, in certain other respects it discourages production and has an adverse effect upon exports.
The problem is very much like the problem with which the predecessor of the Chancellor of the Exchequer dealt when he changed the rate of tax on motorcars to encourage development of designs which would have a profitable export trade. We think that, with this advisory committee as we suggest, the right hon. Gentleman would get valuable advice about the kind of anomalies and difficulties in the Purchase Tax which are having that particularly adverse effect upon the export trade.
10.45 p.m.
The Chancellor of the Exchequer also said that he did not think that our proposal would help in the solution of the Parliamentary difficulties. We all of us realise, from our experience of recent years, that the Parliamentary difficulty of securing an adequate discussion on Purchase Tax problems in the time allowed to Parliament is very great. If the Chancellor had said that our proposal would not be a solution, then I should agree; of course, it does not cover all the problems which, in any event, cannot be taken away from Parliament. But our proposal would help the Parliamentary procedure. It would be something in the nature of a buffer between the multiplicity of all these different representations from trade and industry and their discussion in this House.
The Commons' authority would not be excluded. The House would be able to discuss the matter when a particular decision had been taken by the Treasury after the recommendations by the advisory committee; the House would then have clearly before it the Chancellor's decision, as well as the recommendations of the committee which we propose should be established. The House would retain these powers, and it would have the greater advantage of a narrower issue for decision and a basis on which the discussion should proceed.
We think that this would be a real contribution to a very real problem in Parliamentary procedure; but it is, at the same time, also a contribution to an even wider problem than that presented by Purchase Tax. The complexities of continuous economic problems have been a feature of this century. The central problem of Parliament is to adapt itself to them. We all know how immensely

more difficult it is to deal with these economic problems than it was for the Parliaments of earlier centuries to deal with the political problems of those days. This is no new problem. There were the proposals by the Webbs on the one hand, and by my right hon. Friend the Leader of the Opposition, in a famous lecture of 20 years ago, on the other for something like a subordinate "economic Parliament." I only suggest this because, in relation to this particular problem of Purchase Tax, I feel that we are on the fringe of the central problem of the adjustment of Parliament in these days to its modern tasks.
Let me say in conclusion that, first of all, this is a proposal for an advisory committee. That is, in principle, the same as the proposal from the Chancellor, except that the scope of ours would be wider and our proposals would have more enduring character. It is not thrusting into secrecy that which hitherto has been in public. It is institutionalising the consultations which the Chancellor already has with industry. Further, it would help us as hon. Members of the Committee in that, when representations came from our constituents, we could say that, being allegations of damage to a particular trade or industry, they are being considered by the advisory committee.
Parliament would find itself in no way excluded because it would discuss the recommendations of the committee and the decisions of the Chancellor. A body of this kind could not take over the task falling on the Government or Parliament to anything like the extent that the Imports Advisory Committee does. It would merely contribute one important piece of help to what remains as a difficult problem which would have to be considered also by other methods in all its other aspects.
Had the Chancellor proposed a body similar to that which he has now proposed but with a scope beyond the scope of what is connected with the utility schemes and had he proposed that it should have more of an enduring existence than he seemed to indicate, we should perhaps have been content to go no further. I would say quite definitely that we do not think this is a complete solution of the Parliamentary difficulty and we are not tied to the exact detail of our proposal, and if we were in office we


might find we needed to modify it in some respects. But in order to mark the fact that we think that what is required is more than the Chancellor has tonight proposed, I think we shall go into the Division Lobby against the Chancellor on the subject.

Mr. Martin Lindsay: I thought what a bitter little speech the hon. Lady the Member for Blackburn, East (Mrs. Castle), made just now and that it was quite unworthy of her. I was sorry she did not address her remarks to the very real anomalies in the Purchase Tax which the Chancellor mentioned exist and which show the necessity of setting up some committee such as we have in mind in this proposed Clause. We do not care for the particular type of committee which the Chancellor proposes to set up, but nevertheless I suppose we shall have to submit to it, and we can feel it will do no harm and can only hope it will do some good.
I wish to address a few remarks to the right hon. Gentleman about the terms of reference of this committee. I hope the Chancellor listened carefully to what my hon. Friend the Member for Bebington (Mr. Oakshott) said just now about the very real hardship which is caused to small limited companies and the one-man business which cannot recover Purchase Tax when it is removed. There is an example known to me of a company which has had Purchase Tax removed from 90 per cent. of its range of good: and it is quite impossible for a company like that to collect Purchase Tax from the public, although it is legally possible under these circumstances.
My hon. Friends and I have drawn attention to this matter for several years now and we cannot believe that it is beyond the ability of the Government to find some way of making it possible for this grave injustice to be removed and to find some means of letting these companies and small firms get back their Purchase Tax. Without wishing to take up any further time, I beg the Chancellor to include this particular subject in the terms of reference of this committee.

Mr. Grimond: I hope I shall receive an ovation at the end of my speech as well. We can all, I

think, agree that this tax has given rise, and does give rise, to a great many of the kinds of curiosities and evils already quoted. No mention has been made yet of toothbrushes which, I believe, are a hardy annual in discussion of the Purchase Tax. Therefore, I personally have the greatest sympathy with the intention behind this proposed new Clause, but I do feel considerable doubt whether the committee proposed would do the job asked of it.
I also feel that many of these anomalies which have been quoted are really the business of the Civil Service and should be cleared up, or some of them could be cleared up, by the Civil Service without the need for setting up another advisory committee. I thought we were generally agreed in this Committee that no new committees should be set up but that the Government should do this sort of job themselves.
My view of the Purchase Tax is that it is a bad tax, first, because it is an indirect tax which, like all indirect taxes, is liable to bear very heavily on the people who can least afford it. I do not accept the view that the only goods that bear Purchase Tax are luxuries to which poorer people should not aspire. Secondly, I think it is bad because it throws upon the State the onus of making decisions which the State is not competent to make. What it says is: "We are going to tax anyone who buys anything." This is the sort of broad decision tolerable only in time of war. In war we have to subordinate our personal choice to the needs of the nation. No doubt, in those days, when this tax was introduced, it was very necessary to restrict the consumption of goods and to raise revenue.
Today the main reason for the tax—the Chancellor has told us—Is to raise revenue which is very necessary at this time of re-armament, but we should not accept this tax as permanent. What in fact it says is: "We, the Government, are going to tax everything you want to buy, and we are then going to exempt certain goods. Our reasons are that we think it is right and proper that people should buy these sorts of goods, but if they want to buy anything else, they must pay tax for it. If you prefer to spend your money on good quality, then you are doing something wrong.


You can buy two utility suits but if you prefer to save up and buy one good quality suit we will tax you." That seems to me the sort of decision the State should not make except in a time of emergency.
I take it that the object of this new Clause is really to get over the fundamental difficulty of putting upon the State the burden of making that sort of choice. But is the Clause satisfactory? It brings in the point of view of the manufacturer or the retailer, but, as printed, it does not, on the face of it, pay a great deal of attention to the consumer. The person suffering from the tax is the consumer. This committee is to consist of a chairman and not less than 10 or more than 20 other members to be appointed by the Treasury from persons who have industrial and commercial experience, and it is empowered to hear bodies of persons representing any trade or industry and, only at the discretion of the committee, other persons. There is not a mandatory obligation in the Clause to hear consumers at all.
Then it is left to the committee to decide what is in the national interest. On this I agree with the Chancellor; Parliament may decide the national interest, or you may have a free market in which you allow consumers to decide for themselves, but I do not think you can put the whole of that responsibility upon a committee. It is said that it will hear the case and only make recommendations but if a plea for a reduction of Purchase Tax is considered by the committee, and they recommend against it, it will make our task in Parliament very much more difficult.
Later tonight I hope to say a few words on hand-woven tweed. I must confess if it were decided by this committee that the tax on woven tweeds should be at 100 per cent. in the national interest, my answer would be that it is really not a matter for the committee to recommend in the national interest. I would go so far as to say you might very usefully have someone, perhaps in the Civil Service, who should be constantly examining the effect of the tax on every trade and industry purely from the point of view of that trade and perhaps from the point of view of the export drive. But to talk of the national interest is to bring in something that is only the business of Parliament.
The right hon. Gentleman has given some indication that he has seen that there are problems here. So far he has only dealt with one particular problem. I do think that there is a problem in many trades, not only so far as the export trade is concerned, but the home market, too. It has been argued that we must have a home market if we are to build up an export trade and that we must have quality production in this country. I agree with that. I would ask the Chancellor to extend his view and look at some of the other problems which this tax causes, without necessarily accepting this proposed committee in this particular form.

11.0 p.m.

Colonel J. R. H. Hutchison: I will say straight away that the suggestion which the Chancellor has made this evening, though it does not go nearly far enough, does go some way to meet the difficulties which in everyday life are militating against the national interest. I should like to give very briefly two or three illustrations of the sort of things that are playing havoc just now owing to the particular incidence and method of Purchase Tax.
At a conference which took place recently it was pointed out that in 1947 the assay office at Sheffield hallmarked for silverware almost one million ounces, but in 1950 it had fallen to 300,000 ounces. The tax on that is 100 per cent. That sort of instance is happening all through industry where revenue and trade are being lost because of the very high rate of Purchase Tax.
In woollen cloths, the particulars of tax paid in 1949 and 1950 show that piece goods which were paying 66⅔ per cent. showed a decrease of 47 per cent., and in one concern, in three months to December, 1950. the sales showed an increase of 3.3 per cent. but the Purchase Tax payments showed a decrease of 31 per cent. Therefore, I believe that industrial problems of this kind, with which this advisory committee would be in close touch, would be able to be directed to the Chancellor's attention for anomalies of that kind which are in no way political questions.
I am glad to hear that the Chancellor proposes to set up a temporary industrial advisory ad hoc committee, hut I think the terms of reference are too narrow. If


he were to widen them, he would go even further in the direction which we favour. He must be aware of the number of directions from which it is being represented that our overseas trade is being permanently damaged by the loss of skill and design because we are no longer able to keep on our pay rolls the workers who have that skill.
I had the advantage of going with a productivity team to the United States of America. There we found that there was a market for textiles not of the mass-produced type at all but of special weave, special design and special widths suitable only for the American market. Our task thereafter was to try to persuade the weavers and spinners in this country to provide special facilities, special plant and plans to satisfy the American market. They replied "If we do that and if we fail to get the American market we shall not be able to sell these goods at home with Purchase Tax as it is." So the design and inventiveness and all that has meant so much to British trade is gradually being lost.
Another point on which this advisory committee might well advise the right hon. Gentleman is the curious anomaly whereby visitors to this country from

America get certain facilities for buying goods but other holders of dollars who have not got an American or Canadian passport get no such facilities. Why is that? Surely there is something to be examined there. A Britisher coming from the United States with dollars to spend gets none of the facilities which an American coming to Great Britain at the same time can get.

So I suggest that this subject is bristling with anomalies and problems. The Purchase Tax is creating them. They vary from time to time, and it is asking too much of the Treasury and the Chancellor to keep watch on them unless they are to have permanently advice from industry on the effects of this tax. I ask the Chancellor to consider the appointment of a permanent advisory committee and at any rate consider widening the terms of reference of the ad hoc committee he proposes.

Mr. R. J. Taylor (Lord of the Treasury): Mr. R. J. Taylor (Lord of the Treasury) rose in claimed to move, "That be now put."

Question put, "That now put."

The Committee divided Ayes, 290: Noes, 278.

Division No. 143.]
AYES
[11.7 p.m


Acland, Sir Richard
Castle, Mrs. B. A.
Edwards, John (Brighouse)


Adams, Richard
Champion, A. J.
Edwards, Rt. Hon. Ness (Caerphilly)


Albu, A. H.
Chetwynd, G. R
Edwards, W. J. (Stepney)


Allen, Arthur (Bosworth)
Clunie, J.
Evans, Albert (Islington, S.W.)


Allen, Scholefield (Crewe)
Cocks, F. S.
Evans, Edward (Lowestoft)


Anderson, Frank (Whitehaven)
Coldrick, W.
Evans, Stanley (Wednesbury)


Awbery, S. S.
Collick, P.
Ewart, R.


Ayles, W. H.
Collindridge, F.
Fernyhough, E.


Bacon, Miss Alice
Cook, T. F.
Field, Capt. W. J


Baird, J.
Cooper, Geoffrey (Middlesbrough, W.)
Finch, H, J.


Balfour, A
Cooper, John (Deptford)
Fletcher, Erie (Islington, E.)


Bartley, P
Corbet, Mrs. Freda (Peckham)
Follick, M.


Bellenger, Rt. Hon. F. J.
Cove, W. G.
Foot, M. M.


Benn, Wedgwood
Craddock, George (Bradford, S)
Forman, J. C.


Benson, G.
Crawley, A.
Fraser, Thomas (Hamilton)


Beswick, F.
Crosland, C. A. R.
Freeman, John (Watford)


Bevan, Rt. Hon. A. (Ebbw Vale)
Crossman, R. H. S.
Freeman, Peter (Newport)


Bing, G. H. C.
Cullen, Mrs. A.
Gaitskell, fit. Hon. H. T. N.


Blenkinsop, A.
Daines, P.
Ganley, Mrs. C. S.


Blyton, W. R.
Dalton, Rt. Hon. H.
Gibson, C. W.


Boardman, H.
Darling, George (Hillsborough)
Gilzean, A.


Booth, A.
Davies, A. Edward (Stoke, N.)
Gooch, E. G.


Bottomley, A. G
Davies, Harold (Leek)
Gordon-Walker, Rt. Hon. P. C.


Bowden, H. W.
Davies, Stephen (Merthyr)
Greenwood, Anthony (Rossendale)


Bowles, F. G. (Nuneaton)
de Freitas, Geoffrey
Greenwood, Rt. Hon. Arthur (Wakefield)


Braddock, Mrs. Elizabeth
Deer, G.
Grenfell, Rt. Hon. D. R.


Brook, Dryden (Halifax)
Delargy, H. J.
Grey, C. F.


Brooks, T. J. (Normanton)
Diamond, J.
Griffiths, David (Rother Valley)


Broughlon, Dr. A. D. D.
Dodds, N. N.
Griffiths, Rt. Hon. James (Llanelly)


Brown, Rt. Hon. George (Belper)
Donnelly, D.
Griffiths, W. (Manchester Exchange)


Brown, Thomas (Ince)
Driberg, T. E. N.
Gunter, R. J.


Burke, W. A.
Dugdate, Rt. Hon. John (W. Bromwich)
Haire, John E. (Wycombe)


Burton, Miss E.
Dye, S.
Hale, Joseph (Rochdale)


Butler, Herbert (Hackney, S.)
Ede, Rt. Hon. J. C.
Hale, Leslie (Oldham, W.)


Callaghan, L. J.
Edelman, M.
Hall, Rt. Hon. Glenvil (Coine Valley)


Cermishael, J.

Hall, John (Gateshead, W.)




Hamilton, W. W.
Mann, Mrs. Jean
Slater, J.


Hardy, E. A.
Manual, A. C.
Smith, Ellis (Stoke, S.)


Hargreaves, A.
Marquand, Rt. Hon. H. A
Smith, Norman (Nottingham, S.)


Hastings, S.
Mathers, Rt. Hon. G.
Snow, J. W.


Hayman, F. H.
Mayhew, C. P.
Sorensen, R. W.


Henderson, Rt. Hon. A. (Rowley Regis)
Mellish, R. J.
Soskice, Rt. Hon. Sir Frank


Harbison, Miss M
Masser, F.
Sparks, J. A.


Hewitson, Capt. M
Middleton, Mrs. L.
Steele, T.


Hobson, C. R.
Mikardo, Ian.
Stewart, Michael (Fulham, E.)


Holman, P.
Mitchison, G. R
Stokes, Rt. Hon. R. R.


Holmes, Horace (Hemsworth)
Moeran, E. W.
Strachey, Rt. Hon. J.


Houghton, D.
Monslow, W.
Strauss, Rt. Hon. George (Vauxhall)


Hoy, J.
Moody, A. S.
Stross, Dr. Barnett


Hudson, James (Ealing, N.)
Morgan, Dr. H. B.
Summerskill, Rt. Hon. Edith


Hughes, Emrys (S. Ayrshire)
Morlay, R.
Sylvester, G. O.


Hughes, Hector (Aberdeen, N.)
Morris, Percy (Swansea, W.)
Taylor, Barnard (Mansfield)


Hynd, H. (Accrington)
Morrison, Rt. Hon. H (Lewisham. S.)
Taylor, Robert (Morpeth)


Hynd, J. B. (Attercliffe)
Mort, D. L.
Thomas, David (Aberdare)


Irvine, A. J. (Edge Hill)
Moyle, A.
Thomas, George (Cardiff)


Irving, W. J. (Wood Green)
Mulley, F. W.
Thomas, Iorwerth (Rhondda, W.)


Isaacs, Rt. Hon. G. A.
Murray, J. D.
Thomas, Ivor Owen (Wrekin)


Janner, B.
Nally, W.
Thorneycroft, Harry (Clayton)


Jay, D. P. T.
Neal, Harold (Bolsover)
Thurtle, Ernest


Jeger, George (Goole)
Noel-Baker, Rt. Hon. P. J.
Timmons, J.


Jeger, Dr. Santo (St. Pancras, S.)
O'Brien, T.
Tomney, F.


Jenkins, R. H.
Oldfield, W. H.
Turner-Samuels, M.


Johnson, James (Rugby)
Oliver, G. H.
Ungoed-Thomas, Sir Lynn


Johnston, Douglas (Paisley)
Orbach, M.
Usborne, H.


Jones, David (Hartlepool)
Padley, W. E.
Vernon, W. F.


Jones, Frederick Elwyn (West Ham, S.)
Paget, R. T.
Viant, S. P.


Jones, Jack (Rotherham)
Paling, Rt. Hon. W. (Dearne Valley)
Wallace, H. W.


Jones, William Elwyn (Conway)
Paling, Will T. (Dewsbury)
Watkins, T. E.


Keenan, W.
Pannell, T. C
Webb, Rt. Hon. M. (Bradford, C).


Kenyon, C.
Pargiter, G. A
Weitzman, D.


Key, Rt. Hon. C. W.
Parker, J.
Wells, Percy (Faversham)


King, Dr. H. M.
Paton, J.
Wells, William (Walsall)


Kinghorn, Sqn. Ldr. E
Pearson, A.
West, D. G.


Kinley, J.
Peart, T. F.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Lang, Gordon
Popplewell, E.
White, Mrs. Eirene (E. Flint)


Lee, Frederick (Newton)
Porter, G.
White, Henry (Derbyshire, N. E.)


Lee, Miss Jennie (Cannock)
Price, Philips (Gloucestershire, W)
Whiteley, Rt. Hon. W.


Lever, Harold (Cheatham)
Proctor, W. T.
Wigg, G.


Lever, Leslie (Ardwick)
Pryde, D. J.
Wilcock, Group Capt. C. A. B


Lewis, Arthur (West Ham, N.)
Pursey, Cmdr. H
Wilkes, L.


Lindgren, G. S.
Rankin, J.
Wilkins, W. A.


Lipton, Lt.-Col. M
Rees, Mrs. D.
Willey, Frederick (Sunderland)


Logan, D. G.
Reeves, J.
Willey, Octavius (Cleveland)


Longden, Fred (Small Heath)
Reid, William (Camlachie)
Williams, David (Neath)


McAllister, G.
Rhodes, H.
Williams, Rev. Llywelyn (Abertillery)


MacColl, J. E.
Richards, R.
Williams, Ronald (Wigan)


McGhee, H. G.
Roberts, Goronwy (Caernarvonshire)
Williams, Rt. Hon. Thomas (Don V'lly)


McGovern, J.
Robertson, J. J. (Berwick)
Williams, W. T. (Hammersmith, S.)


McInnes, J.
Robinson, Kenneth (St. Pancras, N.)
Wilson, Rt. Hon. Harold (Huyton)


Mack, J. D.
Rogers, George (Kensington, N.)
Winterbottom, Ian (Nottingham, C)


McKay, John (Wallsend)
Ross, William
Wise, F. J.


McLeavy, F.
Shackleton, E. A. A.
Woodburn, Rt. Hon A


MacMillan, Malcolm (Western Isles)
Shawcross, Rt. Hon. Sir Hartley
Wyalt, W. L


McNeil, Rt. Hon. H.
Shinwell, Rt. Hon. E.
Yates, V. F.


MacPherson, Malcolm (Stirling)
Shurmer, P. L. E.
Younger, Rt. Hon. K.


Mainwaring, W. H.
Silverman, Julius (Erdington)



Mallalieu, E L. (Brigg)
Silverman, Sydney (Nelson)
TELLERS FOR THE AYES:


Mallaliau, J. P. W. (Huddersfield, E.)
Simmons, C. J.
Mr. Hannan and Mr. Royle




NOES


Aitken, W. T.
Bishop, F. P.
Carr, Robert (Mitcham)


Alport, C. J. M.
Black, C. W.
Carson, Hon. E.


Amery, Julian (Preston, N.)
Boles, Lt.-Col. D. C. (Wells)
Channon, H.


Amory, Heathcoat (Tiverton)
Boothby, R.
Churchill, Rt. Hon. W. S.


Arbuthnot, John
Bossom, A. C.
Clarke, Col. Ralph (East Grinstead)


Ashton, H. (Chelmsford)
Bowen, E. R. (Cardigan)
Clarke, Brig. Terence (Portsmouth, W.)


Assheton, Rt. Hon. R. (Blackburn, W.)
Boyd-Carpenter, J. A.
Clyde, J. L.


Astor, Hon. M. L
Boyle, Sir Edward
Colegate, A.


Baker, P. A. D.
Bracken, Rt. Hon. B.
Cooper, Sqn. Ldr. Albert (Iflord, S.)


Baldock, Lt.-Cmdr. J. M.
Braine, B. R.
Cooper-Key, E. M.


Baldwin, A. E.
Braithwaite, Sir Albert (Harrow, W.)
Corbett, Lt.-Col. Uvedale (Ludlow)


Banks, Col. C.
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Craddock, Beresford (Spelthrone)


Baxter, A. B.
Bromley-Davenport, Lt.-Col. W.
Cranborne, Viscount


Beamish, Maj. Tufton
Brooke, Henry (Hampstead)
Crookshank, Capt. Rt. Hon. H. F. C.


Bell, R. M.
Browne, Jack (Govan)
Crosthwaite-Eyre, Col. O. E.


Bennett, Sir Peter (Edgbaston)
Buchan-Hepburn, P. G. T.
Crowder, Capt. John (Finchley)


Bennett, Dr. Reginald (Gosport)
Bullus, Whig Commander E. E
Crowder, Petre (Ruislip—Northwood)


Bennett, William (Woodside)
Burden, F. A.
Cundiff, F. W.


Bevins, J. R. (Liverpool, Toxteth)
Butcher, H. W
Cuthbert, W. N.


Birch, Nigel
Butler, Rt. Hn. R. A. (Saffron Walden)
Darling, Sir William (Edinburgh, S.)







Davidson, Viscountess
Lambert, Hon. G
Redmayne, M.


Davies, Rt. Hon. C. (Montgomery)
Lancaster, Col. C. G
Remnant, Hon. P


Davies, Nigel (Epping)
Langford-Holt, J.
Renton, D. L. M.


de Chair, Somerset
Law, Rt. Hon. R. K.
Roberts, Emrys (Merioneth)


De la Bere, R.
Leather, E. H. C.
Roberts, Maj. Peter (Heeley)


Deedes, W. F.
Legge-Bourke, Maj. E. A. H
Robertson, Sir David (Caithness)


Donner, P. W.
Lennox-Boyd, A. T.
Robinson, Roland (Blackpool, S.)


Drayson, G. B.
Lindsay, Martin
Robson-Brown, W.


Drewe, C.
Linstead, H. N.
Rodgers, John (Sevenoaks)


Dugdale, Maj. Sir Thomas (Richmond)
Llewellyn, D.
Roper, Sir Harold


Duncan, Capt. J. A. L.
Lloyd, Rt. Hn. G. (King's Norton)
Ropner, Col. L.


Dunglass, Lord
Lloyd, Maj. Guy (Renfrew, E.)
Russell, R. S.


Duthie, W. S.
Lloyd, Selwyn (Wirral)
Ryder, Capt. R. E. D.


Eccles, D. M.
Lockwood, Lt.-Col. J. C.
Salter, Rt. Hon. Sir Arthur


Eden, Rt. Hon A
Longden, Gilbert (Herts, S.W.)
Sandys, Rt. Hon. D.


Errol, F. J.
Low, A. R. W.
Scott, Donald


Fisher, Nigel
Lucas, P. B. (Brentford)
Shepherd, William


Fort, R.
Lucas-Tooth, Sir Hugh
Smiles, Lt.-Col. Sir Walter


Foster, John
Lyttelton, Rt. Hon. O.
Smithers, Peter (Winchester)


Fraser, Hon. Hugh (Stone)
McAdden, S. J.
Smyth, Brig. J. G. (Norwood)


Fraser, Sir I. (Morecambe &amp; Lonsdale)
McCorquodale, Rt. Hon. M. S.
Soames, Capt. C.


Fyfe, Rt. Hon. Sir David Maxwell
Macdonald, A. J. F. (Roxburgh)
Spearman, A. C. M


Gage, C. H.
Macdonald, Sir Peter (I. of Wight)
Spens, Sir Patrick (Kensington, S.)


Galbraith, Cmdr. T. D. (Pollok)
Mackeson, Brig. H. R.
Stanley, Capt. Hon. Richard (N. Fylde)


Galbraith, T. G. D. (Hillhead)
McKibbin, A.
Stevens, G. P.


Gammans, L. D.
McKie, J. H. (Galloway)
Steward, W. A. (Woolwich, W.)


Garner-Evans, E. H. (Denbigh)
Maclay, Hon. John
Stewart, Henderson (Fife, E.)


Gates, Maj. E. E.
Maclean, Fitzroy
Stoddart-Scott, Col. M.


George, Lady Megan Lloyd
MacLeod, Iain (Enfield, W.)
Storey, S.


Glyn, Sir Ralph
MacLeod, John (Ross and Cromarty)
Strauss, Henry (Norwich, S.)


Gomme-Duncan, Col. A.
Macmillan, Rt. Hon. Harold (Bromley)
Stuart, Rt. Hon. James (Moray)


Gridley, Sir Arnold
Macpherson, Major Niall (Dumfries)
Studholme, H. G.


Grimond, J.
Maitland, Cmdr. J. W.
Summers, G. S.


Grimston, Hon. John (St. Albans)
Manningham-Buller, R. E
Sutcliffe, H.


Grimston, Robert (Westbury)
Marlowe, A. A. H.
Taylor, Charles (Eastbourne)


Hare, Hon. J. H. (Woodbridge)
Marples, A. E.
Taylor, William (Bradford, N.)


Harris, Frederic (Croydon, N.)
Marshall, Douglas (Bodmin)
Teeling, W.


Harris, Reader (Heston)
Marshall, Sidney (Sutton)
Teevan, T. L.


Harvey, Ian (Harrow, E.)
Maude, Angus (Ealing, S)
Thomas, J. P. L. (Hereford)


Harvie-Watt, Sir George
Maudling, R
Thompson, Kenneth Pugh (Walton)


Head, Brig, A. H.
Medicott, Brig. F
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Headlam, Lt.-Col. Rt. Hn. Sir Cuthbert
Mellor, Sir John
Thorneycroft, Peter (Monmouth)


Heald, Lionel
Molson, A. H. E.
Thornton-Kemsley, Col. C. N


Heath, Edward
Monckton, Sir Walter
Thorp, Brig. R. A. F


Henderson, John (Cathcart)
Moore, Lt.-Col. Sir Thomas
Tilney, John


Hicks-Beach, Maj. W. W
Morrison, John (Salisbury)
Touche, G. C.


Higgs, J. M. C.
Morrison, Rt. Hon. W. S (Cirencester)
Turner, H. F. L


Hill, Dr. Charles (Luton)
Mott-Radclyffe, C. E
Turton, R. H.


Hill, Mrs. E. (Wythenshawe)
Nabarro, G.
Tweedsmuir, Lady


Hinchingbrooke, Viscount
Nicholls, Harmar
Vane, W. M. F.


Hirst, Geoffrey
Nicholson, G.
Vaughan-Morgan, J. K.


Hollis, M. C.
Nield, Basil (Chester)
Vosper, D. F.


Hope, Lord John
Noble, Cmdr. A. H. P
Wakefield, Edward (Derbyshire, W)


Hornsby-Smith, Miss P.
Nugent, G. R. H.
Wakefield, Sir Wavell (Marylebone)


Horsbrugh, Rt. Hon. Florence
Nutting, Anthony
Walker-Smith, D. C.


Howard, Gerald (Cambridgeshire)
Oakshott, H. D.
Ward, Hon. George (Worcester)


Howard, Greville (St. Ives)
Odey, G. W.
Ward, Miss I. (Tynemouth)


Hudson, Sir Austin (Lewisham, N.)
O'Neill, Rt. Hon. Sir Hugh
Waterhouse, Capt. Rt. Hon. C


Hudson, Rt. Hon. Robert (Southport)
Ormsby-Gore, Hon. W. D.
Watkinson, H.


Hudson, W. R. A. (Hull, N.)
Orr, Capt. L. P. S.
Webbe, Sir H. (London)


Hulbert, Wing Cmdr. N. J.
Orr-Ewing, Charles Ian (Hendon, N,)
Wheatley, Maj. M. J. (Poole)


Hurd, A. R.
Orr-Ewing, Ian L. (Weston-super-Mare)
White, Baker (Canterbury)


Hutchinson, Geoffrey (Ilford, N.)
Osborne, C.
Williams, Charles (Torquay)


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Peake, Rt. Hon. D
Williams, Gerald (Tonbridge)


Hutchison, Col. James (Glasgow)
Perkins, W. R. D
Williams, Sir Herbert (Croydon, E)


Hyde, Lt.-Col. H. M.
Peto, Brig. C. H. M
Wills, G.


Hylton-Foster, H. B.
Pickthorn, K.
Wilson, Geoffrey (Truro)


Jennings, R.
Pitman, I. J.
Winterton, Rt. Hon Ear


Johnson, Howard (Kemptown)
Powell, J. Enoch
Wood, Hon. R


Jones, A. (Hall Green)
Price, Henry (Lewisham, W.)
York, C


Joynson-Hicks, Hon. L. W
Prior-Palmer, Brig. O



Kaberry, D.
Profumo, J. D
TELLERS FOR THE NOES:


Kerr, H. W. (Cambridge)
Raikes, H. V.



Kingsmill, Lt.-Col. W. H
Rayner, Brig. R
Major Conant and Mr. Digby.

Question put accordingly, "That the Clause be read a Second time."

The Committee divided: Ayes, 272; Noes, 296.

Division No. 144.
AYES
[11.17 p.m.


Ailken, W. T.
Galbraith, T. G. D. (Hillhead)
Marples, A. E.


Alport, C. J. M.
Gammans, L. D.
Marshall, Douglas (Bodmin)


Amery, Julian (Preston, N)
Garner-Evans, E. H. (Denbigh)
Marshall, Sidney (Sutton)


Amory, Heathcoat (Tiverton)
Gates, Maj. E. E.
Maude, Angus (Ealing, S.)


Arbuthnot, John
Glyn, Sir Ralph
Maudling, R.


Ashton, H. (Chelmsford)
Gomme-Duncan, Col. A.
Medlicott, Brig. F


Assheton, Rt. Hon. R. (Blackburn, W.)
Gridley, Sir Arnold
Mellor, Sir John


Astor, Hon. M. L.
Grimston, Hon. John (St. Albans)
Molson, A. H. E


Baker, P. A. D.
Grimston, Robert (Westbury)
Monckton, Sir Walter


Baldock, Lt.-Cmdr. J M
Hare, Hon. J. H. (Woodbridge)
Moore, Lt.-Col. Sir Thomas


Baldwin, A. E.
Harris, Frederic (Croydon, N)
Morrison, John (Salisbury)


Banks, Col. C.
Harris, Reader (Heston)
Morrison, Rt. Hon. W. S. (Cirencester)


Baxter, A. B.
Harvey, Ian (Harrow, E.)
Mott-Radclyffe, C. E


Beamish, Maj. Tufton
Harvie-Watt, Sir George
Nabarro, G.


Bell, R. M
Head, Brig, A. H.
Nicholls, Harmar


Bennett, Sir Peter (Edgbaston)
Headlam, Lt.-Col. Rt Hn Sir Cuthbert
Nicholson, G.


Bennett, Dr. Reginald (Gosport)
Heald, Lionel
Nield, Basil (Chester)


Bennett, William (Woodside)
Heath, Edward
Noble, Cmdr. A. H. P


Bevins, J. R. (Liverpool, Toxteth)
Henderson, John (Cathcart)
Nugent. G. R. H.


Birch, Nigel
Hicks-Beach, Maj. W. W
Nutting, Anthony


Bishop, F. P.
Higgs, J. M. C.
Oakshott, H. D.


Black, C. W.
Hill, Dr Charles (Luton)
Odey, G. W.


Boles, Lt.-Col D. C. (Wells)
Hill, Mrs. E. (Wythenshawe)
O'Neill, Rt. Hon. Sir Hugh


Boothby, R.
Hinchingbrooke, Viscount
Ormsby-Gore, Hon. W. D.


Bossom, A. C.
Hirst, Geoffrey
Orr, Capt. L. P. S.


Boyd-Carpenter, J. A
Hollis, M. C.
Orr-Ewing, Charles Ian (Hendon, N,)


Boyle, Sir Edward
Hope, Lord John
Orr-Ewing, Ian L. (Weston-super-Mare)


Bracken, Rt. Hon. B
Hornsby-Smith, Miss P.
Osborne, C.


Braine, B. R.
Horsbrugh, Rt. Hon. Florence
Peake, Rt. Hon. O


Braithwaite, Sir Albert (Harrow, W.)
Howard, Gerald (Cambridgeshire)
Perkins, W. R. D.


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Howard, Greville (St. Ives)
Peto, Brig. C. H. M


Bromley-Davenport, Lt.-Col. W.
Hudson, Sir Austin (Lewisham, N.)
Pickthorn, K.


Brooke, Henry (Hampstead)
Hudson, Rt. Hon. Robert (Southport)
Pitman, I. J.


Browne, Jack (Govan)
Hudson, W. R. A. (Hull, N.)
Powell, J. Enoch


Buchan-Hepburn, P. G. T.
Hulbert, Wing Cmdr. N. J.
Price, Henry (Lewisham, W.)


Bullus, Wing Commander E. E.
Hurd, A. R.
Prior-Palmer, Brig. O


Burden, F. A.
Hutchinson, Geoffrey (Ilford, N.)
Profumo, J. D.


Butcher, H. W.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Raikes, H. V.


Butler, Rt. Hn. R. A. (Saffron Walden)
Hutchison, Col. James (Glasgow)
Rayner, Brig. R.


Carr, Robert (Mitcham)
Hyde, Lt.-Col. H. M.
Redmayne, M.


Carson, Hon. E
Hylton-Foster, H. B.
Remnant, Hon. P.


Channon, H.
Jennings, R.
Renton, D. L. M.


Churchill, Rt. Hon. W. S.
Johnson, Howard (Kemptown)
Roberts, Maj. Peter (Heeley)


Clarke, Col. Ralph (East Grinstead)
Jones, A. (Hall Green)
Robertson, Sir David (Caithness)


Clarke, Brig. Terence (Portsmouth, W.)
Joynson-Hicks, Hon. L. W.
Robinson, Roland (Blackpool, S.)


Clyde, J. L.
Kaberry, D.
Robson-Brown, W.


Colegate, A.
Kerr, H. W. (Cambridge)
Rodgers, John (Sevenoaks)


Cooper, Sqn. Ldr. Albert (Iflord, S.)
Kingsmill, Lt.-Col. W. H
Roper, Sir Harold


Cooper-Key, E. M.
Lambert, Hon. G.
Ropner, Col. L.


Corbett, Lt.-Col. Uvedale (Ludlow)
Lancaster, Col. C. G.
Russell, R. S.


Craddock, Beresford (Spelthorne)
Langford-Holt, J.
Ryder, Capt. R. E. D.


Cranborne, Viscount
Law, Rt. Hon. R. K.
Salter, Rt. Hon. Sir Arthur


Crookshank, Capt. Rt. Hon. H. F. C
Leather, E. H. C.
Sandys, Rt. Hon. D.


Crosthwaite-Eyre, Col. O. E
Legge-Bourke, Maj. E. A. H.
Scott, Donald


Crowder, Capt. John (Finchley)
Lennox-Boyd, A. T.
Shepherd, William


Crowder, Petre (Ruislip—Northwood)
Lindsay, Martin
Smiles, Lt.-Col. Sir Walter


Cundiff, F. W.
Linstead, H. N.
Smithers, Peter (Winchester)


Cuthbert, W. N.
Llewellyn, D.
Smyth, Brig. J. G. (Norwood)


Darling, Sir William (Edinburgh, S.)
Lloyd, Rt. Hn. G. (King's Norton)
Soames, Capt. C.


Davidson, Viscountess
Lloyd, Maj. Guy (Renfrew, E.)
Spearman, A. C. M.


Davies, Nigel (Epping)
Lloyd, Selwyn (Wirral)
Spens, Sir Patrick (Kensington, S.)


de Chair, Somerset
Lockwood, Lt.-Col. J. C.
Stanley, Capt. Hon. Richard (N. Fylde)


De la Bere, R.
Longden, Gilbert (Herts, S.W.)
Stevens, G. P.


Deedes, W. F.
Low, A. R. W.
Steward, W. A. (Woolwich, W.)


Donner, P. W.
Lucas, P. B. (Brentford)
Stewart, Henderson (Fife, E)


Drayson, G. B.
Lucas-Tooth, Sir Hugh
Stoddart-Scott, Col. M.


Drewe, C.
Lyttelton, Rt. Hon. O.
Storey, S.


Dugdale, Maj. Sir Thomas (Richmond)
McAdden, S. J.
Strauss, Henry (Norwich, S.)


Duncan, Capt. J. A. L
McCorquodale, Rt. Hon. M. S.
Stuart, Rt. Hon. James (Moray)


Dunglass, Lord
Macdonald, Sir Peter (I. of Wight)
Studholme, H. G


Duthie, W. S.
Mackeson, Brig. H. R.
Summers, G. S.


Eccles, D. M.
McKibbin, A.
Sutcliffe, H.


Eden, Rt. Hon A
McKie, J. H. (Galloway)
Taylor, Charles (Eastbourne)


Errol, F. J
Maclay, Hon. John
Taylor, William (Bradford, N.)


Fisher, Nigel
Maclean, Fitzroy
Teeling, W.


Fort, R.
MacLeod, Iain (Enfield, W.)
Teevan, T. L.


Foster, John
MacLeod, John (Ross and Cromarty)
Thomas, J. P. L. (Hereford)


Fraser, Hon. Hugh (Stone)
Macmillan, Rt. Hon. Harold (Bromley)
Thompson, Kenneth Pugh (Walton)


Fraser, Sir I. (Morecambe &amp; Lonsdale)
Macpherson, Major Niall (Dumfries)
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Fyfe, Rt. Hon. Sir David Maxwell
Maitland, Cmdr. J. W.
Thorneycroft, Peter (Monmouth)


Gage, G. H.
Manningham-Buller, R. E.
Thornton-Kemsley, Col. C. N.


Galbraith, Cmdr. T. D. (Pollok)
Marlowe, A. A. H.
Thorp, Brig. R. A. F.







Tilney, John
Walker-Smith, D. C.
Williams, Sir Herbert (Croydon, E)


Touche, G. C.
Ward, Hon. George (Worcester)
Wills, G.


Turner, H. F. L.
Ward, Miss I. (Tynemouth)
Wilson, Geoffrey (Truro)


Turton, R. H.
Waterhouse, Capt. Rt. Hon. C
Winterton, Rt. Hon. Earl


Tweedsmuir, Lady
Watkinson, H.
Wood, Hon. R


Vane, W. M. F.
Webbe, Sir H. (London)
York, C


Vaughan-Morgan, J. K.
Wheatley, Maj. M. J. (Poole)



Vosper, D. F.
White, Baker (Canterbury)
TELLERS FOR THE AYES:


Wakefield, Edward (Derbyshire, W.)
Williams, Charles (Torquay)
Major Conant and Mr. Digby.


Wakefield, Sir Wavell (Marytlbone)
Williams, Gerald (Tonbridge)





NOES


Acland, Sir Richard
Edelman, M.
Jones, William Elwyn (Conway)


Adams, Richard
Edwards, John (Brighouse)
Keenan, W.


Albu, A. H.
Edwards, Rt. Hon. Ness (Caerphilly)
Kenyon, C.


Allen, Arthur (Bosworth)
Edwards, W. J. (Stepney)
Key, Rt. Hon. C. W.


Allen, Scholefield (Crewe)
Evans, Albert (Islington, S.W.)
King, Dr. H. M.


Anderson, Frank (Whitehaven)
Evans, Edward (Lowestoft)
Kinghorn, Sqn. Ldr. E.


Awbery, S. S.
Evans, Stanley (Wednesbury)
Kinley, J.


Ayles, W. H.
Ewart, R.
Lang, Gordon


Bacon, Miss Alice
Feryhough, E.
Lee, Frederick (Newton)


Baird, J
Field, Capt. W. J
Lee, Miss Jennie (Cannock)


Balfour, A.
Finch, H. J.
Lever, Harold (Cheetham)


Bartley, P
Fletcher, Eric (Islington, E.)
Lever, Leslie (Ardwick)


Bellenger, Rt. Hon. F. J.
Follick, M.
Lewis, Arthur (West Ham, N.)


Bern, Wedgwood
Foot, M. M.
Lindgren, G. S.


Benson, G.
Forman, J. C.
Lipton, Lt.-Col. M


Beswick, F.
Fraser, Thomas (Hamilton)
Logan, D. G.


Bevan, Rt. Hon. A. (Ebbw Vale)
Freeman, John (Watford)
Longden, Fred (Small Heath)


Bing, G. H. C.
Freeman, Peter (Newport)
McAllister, G.


Blenkinsop, A.
Gaitskell, Rt. Hon. H. T. N
MacColl, J. E.


Blyton, W. R.
Ganley, Mrs. C. S.
Macdonald, A. J. F. (Roxburgh)


Boardman, H.
George, Lady Megan Lloyd
McGhee, H. G.


Booth, A.
Gibson, C. W.
McGovern, J.


Bottomley, A. G.
Gilzean, A.
McInnes, J.


Bowden, H. W.
Gooch, E. G.
Mack, J. D.


Bowen, E. R. (Cardigan)
Gordon-Walker, Rt. Hon. P. C.
McKay, John (Wallsend)


Bowles, F. G. (Nuneaton)
Greenwood, Anthony (Rossendale)
McLeavy, F.


Braddock, Mrs. Elizabeth
Greenwood, Rt. Hon. Arthur (Wakefield)
MacMillan, Malcolm (Western Isles)


Brook, Dryden (Halifax)
Grenfell, Rt. Hon. D. R.
McNeil, Rt. Hon. H.


Brooks, T. J. (Normanton)
Grey, C. F.
MacPherson, Malcolm (Stirling)


Broughton, Dr. A. D. D
Griffifhs, David (Rother Valley)
Mainwaring, W. H.


Brown, Rt. Hon. George (Belper)
Griffiths, Rt. Hon. James (Llanelly)
Mallalieu, E. L. (Brigg)


Brown, Thomas (Ince)
Griffiths, W. (Manchester Exchange)
Mallalieu, J. P. W. (Huddersfield, E.)


Burke, W. A.
Grimond, J.
Mann, Mrs. Jean


Burton, Miss E.
Gunter, R. J.
Manuel, A. C.


Butler, Herbert (Hackney, S.)
Haire, John E. (Wycombe)
Marquand, Rt. Hon. H. A.


Callaghan, L. J.
Hale, Joseph (Rochdale)
Mathers, Rt. Hon. G.


Carmichael, J.
Hale, Leslie (Oldham, W.)
Mayhew, C. P.


Castle, Mrs. B. A.
Hall, Rt. Hon. Glenvil (Colne Valley)
Hellish, R. J.


Champion, A. J.
Hall, John (Gateshead, W.)
Messer, F.


Chetwynd, G. R
Hamilton, W. W.
Middleton, Mrs L


Clunie, J.
Hannan, W.
Mikardo, Ian


Cocks, F. S.
Hardy, E. A.
Mitchison, G. R


Coldrick, W.
Hargreaves, A.
Moeran, E. W.


Collick, P.
Hastings, S,
Monslow, W.


Collindridge, F.
Hayman, F. H.
Moody, A. S


Cook, T. F.
Henderson, Rt. Hon. A. (Rowley Regis)
Morgan, Dr. H. B


Cooper, Geoffrey (Middlesbrough, W.)
Herbison, Miss M
Morley, R


Cooper, John (Deptford)
Hewitson, Capt. M
Morris, Percy (Swansea, W.)


Corbet, Mrs. Freda (Peckham)
Hobson, C. R.
Morrison, Rt. Hon. H. (Lewisham, S.)


Cove, W. G.
Holman, P.
Mort, D. L.


Craddock, George (Bradford, S.)
Holmes, Horace (Hemsworth)
Moyle, A.


Crawley, A.
Houghton, D.
Mulley, F. W.


Crosland, C. A. R
Hoy, J.
Murray, J. D.


Crossman, R. H. S.
Hudson, James (Ealing, N.)
Nally, W




Neal, Harold (Bolsover)


Cullen, Mrs. A
Hughes, Emrys (S. Ayrshire)
Noel-Baker, Rt. Hon. P. J.


Daines, P.
Hughes, Hector (Aberdeen, N.)
O'Brien, T.


Dalton, Rt. Hon. H.
Hynd, H. (Accrington)
Oldfield, W. H.


Darling, George (Hillsborough)
Hynd, J. B. (Attercliffe)
Oliver, G. H.


Davies, A. Edward (Stoke, N.)
Irvine, A. J. (Edge Hill)
Orbach, M.


Davies, Rt. Hon. C. (Montgomery)
Irving, W. J. (Wood Green)
Padley, W. E.


Davies, Harold (Leek)
Isaacs, Rt. Hon. G. A.
Paget, R. T.


Davies, Stephen (Merthyr)
Janner, B.
Paling, Rt. Hon. W. (Dearne Valley)


de Freitas, Geoffrey
Jay, D. P. T.
Paling, Will T. (Dewsbury)


Deer, G.
Jeger, George (Goole)
Pannell, T. C.


Diamond, J.
Jeger, Dr. Santo (St. Pancras, S.)
Pargiter, G. A


Dodds, N. N.
Jenkins, R. H.
Parker, J.


Donnelly, D.
Johnson, James (Rugby)
Paton, J


Driberg, T. E. N.
Johnston, Douglas (Paisley)
Pearson, A.


Dugdale, Rt. Hon. John (W Bromwich)
Jones, David (Hartlepool)
Peart, T. F.


Dye, S.
Jones, Frederick Elwyn (West Ham, S.)
Porter, G


Ede, Rt. Hon. J. C.
Jones, Jack (Rotherham)
Price, Philips (Gloucestershire, W)







Proctor, W. T.
Soskice, Rt. Hon. Sir Fran
Weitzman, D.


Pryde, D. J.
Sparks, J. A.
Wells, Percy (Faversham)


Pursey, Cmdr. H
Steele, T,
Wells, William (Walsall)


Rankin, J.
Stewart, Michael (Fulham, E.)
West, O. G.


Rees, Mrs. D.
Stokes, Rt. Hon. R. R.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Reeves, J.
Strachey, Rt. Hon. J.
White, Mrs. Eirene (E. Flint)


Reid, William (Camlachie)
Strauss, Rt. Hon. George (Vauxhall)
White, Henry (Derbyshiro, N E)


Rhodes, H.
Stross, Dr. Barnett
Whiteley, Rt. Hon. W.


Richards, R.
Summerskill, Rt. Hon. Edith
Wigg, G.


Roberts, Emrys (Merioneth)
Sylvester, G. O.
Wilcock, Group Capt C. A. B


Roberts, Goronwy (Caernarvonshire)
Taylor, Bernard (Mansfield)
Wilkes, L.


Robertson, J. J. (Berwick)
Taylor, Robert (Morpeth)
Wilkins, W. A.


Robinson, Kenneth (St. Pancras, N)
Thomas, David (Aberdare)
Willey, Frederick (Sunderland)


Rogers, George (Kensington, N.)
Thomas, George (Cardiff)
Willey, Octavius (Cleveland)


Ross. William
Thomas, Iorwerth (Rhondda, W.)
Williams, David (Neath)


Royle, C.
Thomas, Ivor Owan (Wrekin)
Williams, Rev. Llywelyn (Abertillery)


Shackleton, E. A. A.
Thorneycroft, Harry (Clayton)
Williams, Ronald (Wigan)


Shawcross, Rt. Hon. Sir Hartley
Thurtle, Ernest
Williams, Rt. Hon. Thomas (Don V'lly)


Shinwell, Rt. Hon. E.
Timmons, J.
Williams, W. T. (Hammersmith, S.)


Shurmer, P. L. E.
Tomney, F.
Wilson, Rt. Hon. Harold (Huyton)


Silverman, Julius (Erdington)
Turner-Samuels, M.
Winterbottom, Ian (Nottingham, C.)


Silverman, Sydney (Nelson)
Ungoed-Thomat, Sir Lynn.
Wise, F. J.


Simmons, C. J.
Usborne, H.
Woodburn, Rt. Hon A.


Slater, J.
Vernon, W. F.
Wyatt, W. L


Smith, Ellis (Stoke, S.)
Viant, S. P.
Yates, V. F.


Smith, Norman (Nottingham. S.)
Wallace, H. W
Younger, Rt. Hon K


Snow, J W.
Watkins, T. E.



Sorensen, R. W
Webb, Rt. Hon. M (Bradford. C)
TELLERS FOR THE NOES:




Mr. Popplewell and Mr. Delargy.

11.30 p.m.

Mr. Churchill: I rise to elicit the intentions of the Government, and to put myself in order I beg to move, "That the Chairman do report Progress and ask leave to sit again."
I address myself particularly to the right hon. Gentleman the Leader of the House. What are the desires and intentions of the Government at this stage in our proceedings? It seems to me that, if they wish, we could now adjourn and continue the discussion tomorrow in the ordinary way, when everything could be wound up in a decorous fashion. Certainly no one who has listened to all these debates, which I have not done—[Interruption]—I have listened by proxy to all these debates, and certainly anyone who has been in that position must feel that they have been conducted with singular calm, composure and great patience on the part of Ministers, whose manners have fully risen to the level of the occasion. We really have nothing to regret in the thorough discussion of the Budget to date.
Now we are told there is a story about buses. Indeed, some of my hon. Friends have been making an examination of motor transport available. I did suggest the political levy of the trade unions might be of some assistance in this small matter. The suggestion was not accepted. Apparently it was not necessary. What with the motorcars provided at Government expense for Ministers and others, there are, I believe, a larger number of motor vehicles in attendance on the

Socialist Government on the morrow of their great social revolution than there are on the side of the Conservative Party, and there are comparably more vehicles available for both sides than there were in the wicked era of the Tory aristocratic days before the First World War.
I do not think that we ought to have this rather pathetic and pitiful whine that there are no more conveyances after 11.45 at night. I do not think that ought to decide our action. If it be pleaded that that is the case, I would ask the Leader of the House whether he would not think it better to turn the rest of this business over until tomorrow, and begin the Sitting in the regular way with questions and then finish the Budget—I will not say in a blaze of triumph, but at any rate in a mild perspiration of good will.

The Secretary of State for the Home Department (Mr. Ede): Not in the last phrase of the right hon. Gentleman, but, I think, by the sweat of our brow have we reached the present stage. Frankly, I endorse what the right hon. Gentleman has said about the way in which these discussions have been conducted during the last three or four days of our debates on this Bill. Like him, most of my knowledge comes by proxy. [HON. MEMBERS: "No!?] I have not attended the Committee as much as usual because I have had plenty to do elsewhere in the House, and also I thought that possibly if I and the right hon. Gentlemen stayed away the decorum of the proceedings would be greatly increased.
I want quite wholeheartedly to pay tribute to the way in which there has been a great effort on the part of both sides of the Committee to conduct our proceedings with reasonable speed, without doing any undue injury to the necessity of properly examining the Bill before us. I regret to say I must ask the Committee to complete the Committee stage of the Bill at this Sitting. I did not expect that that remark would be received with enthusiasm on either side of the Committee.
I am disappointed that I have to ask the Committee to continue its Sitting, but it is necessary to work to a strict timetable in this matter. I desire that there shall be ample opportunity for consideration of Amendments put down for the Report stage, and I think that to take an extra day at this stage of the Bill would make that more difficult.

Mr. Churchill: Why?

Mr. Ede: Because, as the right hon. Gentleman knows, we have to get the Bill through all its stages to comply with what is known as the Gibson-Bowles Act by certain dates. We have to get it to another place so that—

Mr. Lyttelton: May I remind the right hon. Gentleman that the Third Reading of the Finance Bill took place last year on 13th July.

Mr. Ede: I accept the right hon. Gentleman's word for it, but that could mean that the House could be kept sitting until about 13th or 14th August. I do not know whether right hon. and hon. Gentlemen opposite claim to control the pace at which another place proceeds with their business, but they are entitled to a month for the consideration of a Money Bill

before the power of this House to insist upon the passage of a Bill becomes operative. I hope that the good will which has characterised our proceedings may continue, and that we shall be able, in a few hours from now, to complete the Committee stage of the Bill.

Mr. Boyd-Carpenter: I understand from the right hon. Gentleman's announcement of his decision that he accepts two facts. In the first place, he accepts that the debates during the last few days have been conducted in a proper manner in order properly to discuss the Bill, but that it is the wish of the Government, even at the cost of a late Sitting, to conclude the discussion of the Bill tonight. Both these propositions are arguable ones, but I do not seek to dispute them at this moment.
All I desire to do is to express my regret that if these are the views of the Leader of the House, it is rather a pity he did not bother to communicate them to the Prime Minister. The Prime Minister, in the message which he has sent to the Socialist candidate in the Westhoughton by-election, says:
The Opposition do all they can to hamper the Government by means of late Sittings. Unable to win in Debate, they hope to exhaust physically the supporters of the Government. The long debates on Clauses in the Finance Bill designed to prevent tax-dodging are typical of those tactics.
All I desire to say is that I hope that the repudiation by the Leader of the House of those statements will be noted by the electors.

Question put, "That the Chairman do report Progress and ask leave to sit again."

The Committee divided: Ayes, 269; Noes, 293.

Division No. 145.]
AYES
[11.41 p.m


Aitken, W. T.
Bennett, William (Woodside)
Buchan-Hepburn, P. G. T.


Alport, C. J. M.
Bevins, J. R. (Liverpool, Toxtath)
Bullus, Wing Commander E. E


Amery, Julian (Preston, N.)
Birch, Nigel
Burden, F. A.


Amory, Heathcoat (Tiverton)
Bishop, F. P.
Butcher, H. W.


Arbuthnot, John
Black, C. W.
Butler, Rt. Hn. R. A. (Saffron Walden)


Ashton, H. (Chelmsford)
Boles, Lt.-Col. D. C. (Wells)
Carr, Robert (Mitcham)


Assheton, Rt. Hon. R. (Blackburn, W.)
Boothby, R.
Carson, Hon. E.


Astor, Hon. M. L.
Bossom, A, C.
Channon, H.


Baker, P. A. D.
Boyd-Carpenter, J. A.
Churchill, Rt. Hon. W. S.


Baldock, Lt.-Cmdr. J. M
Boyle, Sir Edward
Clarke, Col. Ralph (East Grimstead)


Baldwin, A. E.
Bracken, Rt. Hon. B.
Clarke, Brig. Terence (Portsmouth, W.)


Banks, Col. C.
Braine, B. R.
Clyde, J. L.


Baxter, A. B.
Braithwaite, Sir Albert (Harrow, W)
Colegate, A.


Beamish, Maj. Tufton
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Conant, Maj. R. J. E.


Bell, R. M.
Bromley-Davenport, Lt.-Col. W.
Cooper, Sqn. Ldr. Albert (Iflord, S.)


Bennett, Sir Peter (Edgbaston)
Brooke, Henry (Hampstead)
Cooper-Key, E. M.


Bennett, Dr. Reginald (Gosport)
Browne, Jack (Govan)
Corbett, Lt.-Col. Uvedale (Ludlow)




Craddock, Beresford (Spelthorne)
Jones, A. (Hall Green)
Raikes, H. V.


Cranborne, Viscount
Joynson-Hicks, Hon. L. W.
Rayner, Brig. R.


Crookshank, Capt. Rt. Hon. H. F. C.
Kaberry, D.
Redmayne, M.


Crosthwaite-Eyre, Col. O. E.
Kerr, H. W. (Cambridge)
Remnant, Hon. P.


Crowder, Capt. John (Finchley)
Kingsmill, Lt.-Col. W. H
Renton, D. L. M.


Crowder, Petre (Ruislip—Northwood)
Lambert, Hon. G.
Roberts, Maj. Peter (Heeley)


Cundiff, F. W.
Lancaster, Col. C. G.
Robertson, Sir David (Caithness)


Cuthbert, W. N.
Langford-Holt, J.
Robinson, Roland (Blackpool, S.)


Darling, Sir William (Edinburgh. S)
Law. Rt. Hon. R. K.
Robson-Brown, W.


Davidson, Viscountess
Leather, E. H. C.
Rodgers, John (Sevenoaks)


Davies, Nigel (Epping)
Legge-Bourke, Maj. E. A. H.
Roper, Sir Harold


de Chair, Somerset
Lennox-Boyd, A. T.
Ropner, Col. L.


De la Bere, R.
Lindsay, Martin
Russell, R. S.


Deedes, W. F.
Linstead, H. N.
Ryder, Capt. R. E. D.


Digby, S. Wingfield
Llewellyn, D.
Salter, Rt. Hon. Sir Arthur


Donner, P. W.
Lloyd, Rt. Hn. G. (King's Norton)
Sandys, Rt. Hon. D.


Drayson, G. B.
Lloyd, Maj. Guy (Renfrew, E.)
Scott, Donald


Drews, C.
Lloyd, Selwyn (Wirral)
Shepherd, William


Dugdale, Maj. Sir Thomas (Richmond)
Lockwood, Lt.-Col. J. C.
Smiles, Lt.-Col. Sir Walter


Duncan, Capt. J. A L.
Longden, Gilbert (Herts, S.W.)
Smithers, Peter (Winchester)


Dunglass, Lord
Low, A. R. W.
Smyth, Brig. J. G. (Norwood)


Duthie, W. S.
Lucas, P. B. (Brentford)
Soames, Capt C.


Eccles, D. M.
Lucas-Tooth, Sir Hugh
Spearman, A. C. M.


Eden, Rt. Hon A
Lyttelton, Rt. Hon. O.
Spens, Sir Patrick (Kensington, S.)


Errol, F. J.
McAdden, S. J.
Stanley, Capt. Hon. Richard (N. Fylde)


Fisher, Nigel
McCorquodale, Rt. Hon. M. S.
Stevens, G. P.


Fort, R.
Macdonald, Sir Peter (I. of W[...])
Steward, W. A. (Woolwich, W.)


Foster, John
Mackeson, Brig. H. R.
Stewart, Henderson (Fife, E.)


Fraser, Hon. Hugh (Stone)
McKibbin, A.
Stoddart-Scott, Col. M.


Fraser, Sir I. (Morecambe &amp; Lonsdale)
McKie, J. H. (Galloway)
Storey, S.


Fyfe, Rt. Hon. Sir David Maxwell
Maclay, Hon. John
Strauss, Henry (Norwich, S.)


Gage, C. H.
Maclean, Fitzroy
Stuart, Rt. Hon. James (Moray)


Galbraith, Cmdr. T. D. (Pollok)
MacLeod, Iain (Enfield, W.)
Summers, G. S


Galbraith, T. G. D. (Hillhead)
MacLeod, John (Ross and Cromarty)
Sulcliffe, H.


Gammans, L. D.
Macmillan, Rt. Hon. Harold (Bromley)
Taylor, Charles (Eastbourne)


Garner-Evans, E. H. (Denbigh)
Macpherson, Major Niall (Dumfries)
Taylor, William (Bradford, N.)


Gates, Maj. E. E.
Maitland, Cmdr. J. W.
Teeling, W.


Gomme-Duncan, Col. A.
Manningham-Buller, R. E
Teevan, T. L.


Gridley, Sir Arnold
Marlowe, A. A. H.
Thomas, J. P. L. (Hereford)


Grimston, Hon. John (St. Albans)
Marples, A. E.
Thompson, Kenneth Pugh (Walton)


Grimston, Robert (Westbury)
Marshall, Douglas (Bodmin)
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Hare, Hon. J. H. (Woodbridge)
Marshall, Sidney (Sutton)
Thorneycroft, Peter (Monmouth)


Harris, Frederic (Croydon, N.)
Maude, Angus (Ealing, S)
Thornton-Kemsley, Col. C. N.


Harris, Reader (Heston)
Maudling, R.
Thorp, Brig. R. A. F.


Harvey, Ian (Harrow, E.)
Medlicott, Brig. F
Tilney, John


Harvie-Watt, Sir George
Mellor, Sir John
Touche, G. C.


Head, Brig, A. H
Molson, A. H. E.
Turner, H. F. L.


Headlam, Lt.-Col. Rt. Hn. Sir Cuthbert
Monckton, Sir Walter
Turton, R. H.


Heald, Lionel
Moore, Lt.-Col. Sir Thomas
Tweedsmuir, Lady


Henderson, John (Cathcart)
Morrison, John (Salisbury)
Vane, W. M. F.


Hicks-Beach, Maj. W. W.
Morrison, Rt. Hon. W. S (Cirencester)
Vaughan-Morgan, J. K.


Higgs, J. M. C.
Mott-Radclyffe, C. E
Vosper, D. F.


Hill, Dr. Charles (Luton)
Nabarro, G.
Wakefield, Edward (Derbyshire, W.)


Hill, Mrs. E. (Wythenshawe)
Nicholls, Harmar
Wakefield, Sir Wavell (Marylebone)


Hinchingbrooke, Viscount
Nicholson, G.
Walker-Smith, D. C.


Hirst, Geoffrey
Noble, Cmdr. A. H. P
Ward, Hon. George (Worcester)


Mollis, M. C.
Nugent, G. R. H.
Ward, Miss I. (Tynemouth)


Hope, Lord John
Nutting, Anthony
Waterhouse, Capt Rt. Hon C


Hornsby-Smith, Miss P
Oakshott, H. D.
Watkinson, H.


Horsbrugh, Rt. Hon. Florence
Odey, G. W.
Webbe, Sir H. (London)


Howard, Gerald (Cambridgeshire)
O'Neill, Rt. Hon. Sir Hugh
Wheatley, Maj. M. J. (Poole)


Howard, Greville (SI. Ives)
Ormsby-Gore, Hon. W. D.
White, Baker (Canterbury)


Hudson, Sir Austin (Lewisham, N.)
Orr, Capt. L. P. S.
Williams, Charles (Torquay)


Hudson, Rt. Hon. Robert (Southport)
Orr-Ewing, Charles Ian (Hendon, N,)
Williams, Gerald (Tonbridge)


Hudson, W. R. A. (Hull, N.)
Orr-Ewing, Ian L. (Weston-super-Mare)
Williams, Sir Herbert (Croydon, E)


Hulbert, Wing Cmdr. N. J.
Osborne, C.
Wills, G.


Hurd, A. R.
Peake, Rt. Hon. O.
Wilson, Geoffrey (Truro)


Hutchinson, Geoffrey (llford, N.)
Perkins, W. R. D.
Winterton, Rt. Hon. Earl


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Peto, Brig. C. H. M
Wood. Hon R


Hutchison, Col James (Glasgow)
Pitman, I. J.
Yo-k C


Hyde, Lt.-Col. H. M.
Powell, J. Enoch



Hyllon-Foster, H. B.
Price, Henry (Lewisham, W)
TELLERS FOR THE AYES:


Jennings, R.
Prior-Palmer, Brig. O.
Mr. Srudholme and Mr. Edward Heath


Johnson, Howard (Kemplown)
Profumo, J. D.





NOES


Acland, Sir Richard
Bacon, Miss Alice
Beswick, F.


Adams, Richard
Baird, J.
Bevan, Rt. Hon. A. (Ebbw Vale)


Albu, A. H.
Barf our, A.
Bing, G. H. C.


Allen, Arthur (Bosworth)
Bartley, P,
Blenkinsop, A.


Anderson, Frank (Whitehaven)
Bellenger, Rt. Hon. F. J
Blyton, W. R.


Awbery, S. S.
Benn, Wedgwood
Boardman, H.


Ayles, W. H.
Benson, G.
Booth, A.







Bottomley, A. G.
Hall, John (Gateshead, W.)
Nally, W.


Bowles, F. G. (Nuneaton)
Hamilton, W. W.
Neal, Harold (Bolsover)


Braddock, Mrs. Elizabeth
Hannan, W.
Noel-Baker, Rt. Hon. P. J.


Brook, Dryden (Halifax)
Hardy, E. A.
O'Brien, T.


Brooks, T. J. (Normanton)
Hargreaves, A
Oldfield, W. H.


Broughton, Dr. A. D. D
Hastings, S.
Oliver, G. H.


Brown, Rt. Hon. George (Belper)
Hayman, F. H.
Orbach, M.


Brown, Thomas (Ince)
Henderson, Rt. Hon. A. (Rowley Regis)
Padley, W. E.


Burke, W. A.
Herbison, Miss M.
Paget, R. T.


Burton, Miss E.
Hewitson, Capt. M.
Paling, Rt. Hon. W. (Dearne Valley)


Butler, Herbert (Hackney, S.)
Hobson, C. R.
Paling, Will T. (Dewsbury)


Callaghan, L. J.
Holman, P.
Pannell, T. C.


Carmichael, J.
Holmes, Horace (Hemsworth)
Pargiter, G. A


Castle, Mrs. B. A
Houghton, D.
Parker, J.


Champion, A. J.
Hoy, J.
Paton, J.


Chetwynd, G. R
Hudson, James (Ealing, N.)
Pearson, A.


Clunie, J.
Hughes, Emrys (S. Ayrshire)
Peart, T. F.


Cocks, F. S.
Hughes, Hector (Aberdeen, N.)
Popplewell, E.


Coldrick, W.
Hynd, H. (Accrington)
Porter, G


Collick, P.
Hynd, J. B. (Attercliffe)
Price, Philips (Gloucestershire. W.)


Collindridge, F.
Irvine, A. J. (Edge Hill)
Proctor, W. T.


Cook, T. F.
Irving, W. J. (Wood Green)
Pryde, D. J.


Cooper, Geoffrey (Middlesbrough, W.)
Isaacs, Rt. Hon. G. A.
Pursey, Cmdr. H


Cooper, John (Deptford)
Janner, B.
Rankin, J.


Corbet, Mrs. Freda (Peckham)
Jay, D. P. T.
Rees, Mrs. D.


Cove, W. G.
Jeger, George (Goole)
Reeves, J.


Craddock, George (Bradford, S.)
Jeger, Dr. Santo (St. Pancras, S.)
Reid, William (Camlachie)


Crawley, A.
Jenkins, R. H.
Rhodes, H.


Crosland, C. A. R.
Johnson, James (Rugby)
Richards, R.


Crossman, R. H. S
Johnston, Douglas (Paisley)
Roberts, Emrys (Merioneth)


Cullen, Mrs. A
Jones, David (Hartlepool)
Roberts, Goronwy (Caernarvonshire)


Daines, P.
Jones, Frederick Elwyn (West Ham, S.)
Robertson, J. J. (Berwick)


Dalton, Rt. Hon. H.
Jones, Jack (Rotherham)
Robinson, Kenneth (St. Pancras, N.)


Darling, George (Hillsborough)
Jones, William Elwyn (Conway)
Rogers, George (Kensington, N.)


Davies, A. Edward (Stoke, N.)
Keenan, W.
Ross, William


Davies, Rt. Hon. C (Montgomery)
Kenyon, C.
Royle, C.


Davies, Harold (Leek)
Key, Rt. Hon. C. W.
Shackleton, E. A. A.


Davies, Stephen (Merthyr)
King, Dr. H. M.
Shawcross, Rt. Hon. Sir Hartey


de Freitas, Geoffrey
Kinghorn, Sqn. Ldr E.
Shinwell, Rt. Hon. E.


Deer, G.
Kinley, J.
Shurmer, P. L. E.


Diamond, J.
Lang, Gordon
Silverman, Julius (Erdington)


Dodds, N. N.
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Donnelly, D.
Lee, Miss Jennie (Cannock)
Simmons, C. J.


Driberg, T. E. N.
Lever, Harold (Cheetham)
Slater, J.


Dugdale, Rt. Hon. John (W. Bromwich)
Lever, Leslie (Ardwick)
Smith, Ellis (Stoke, S.)


Dye, S.
Lewis, Arthur (West Ham, N.)
Smith, Norman (Nottingham, S.)


Ede, Rt. Hon. J. C
Lindgren, G. S
Snow, J. W.


Edelman, M.
Lipton, Lt.-Col M.
Sorensen, R. W


Edwards, John (Brighouse)
Logan, D. G.
Soskice, Rt. Hon Sir Frank


Edwards, Rt. Hon. Ness (Caerphilly)
Longden, Fred (Small Heath)
Sparks, J. A.


Edwards, W. J. (Stepney)
McAllister, G.
Steele, T.


Evans, Abert (Islington, S.W.)
MacColl, J. E.
Stewart, Michael (Fulham, E.)


Evans, Edward (Lowestoft)
Macdonald, A. J. F. (Roxburgh)
Stokes, Rt. Hon. R. R.


Evans, Stanley (Wednesbury)
McGhee, H. G.
Strachey, Rt. Hon. J.


Ewart, R.
McGovern, J.
Strauss, Rt. Hon. George (Vauxhall)


Fernynough, E
McInnes, J.
Stross, Dr. Barnett


Field, Capt. W J
Mack, J. D.
Summerskill, Rt. Hon. Edith


Finch, H. J.
McKay, John (Wallsend)
Sylvester, G. O.


Fletcher, Eric (Islington, E.)
McLeavy, F.
Taylor, Bernard (Mansfield)


Follick, M.
MacMillan, Malcolm (Western Isles)
Taylor, Robert (Morpeth)


Foot, M. M
McNeil, Rt. Hon. H.
Thomas, David (Aberdare)


Forman, J. C.
MacPherson, Malcolm (Stirling)
Thomas, George (Cardiff)


Fraser, Thomas (Hamilton)
Mainwaring, W. H.
Thomas, Iorwerth (Rhondda, W.)


Freeman, John (Watford)
Mallalieu, E. L. (Brigg)
Thomas, Ivor Owen (Wrekin)


Freeman, Peter (Newport)
Mallalieu, J. P. W. (Huddersfield, E.)
Thorneycroft, Harry (Clayton)


Gaitskell, Rt. Hon. H. T. N
Mann, Mrs. Jean
Thurtle, Ernest


Ganley, Mrs. C. S.
Manuel, A. C.
Timmons, J.


George, Lady Megan Lloyd
Marquand, Rt. Hon. H. A
Tomney, F.


Gibson, C. W.
Mathers, Rt. Hon. G.
Turner-Samuels, M.


Gilzean, A.
Mayhew, C. P
Ungoed-Thomas, Sir Lynn


Gooch, E. G.
Mellish, R. J.
Usborne, H.


Gordon-Walker, Rt. Hon. P. C.
Messer, F.
Vernon, W. F


Greenwood, Anthony (Rossendale)
Middleton, Mrs. L
Viant, S P


Greenwood, Rt. Hon. Arthur (Wakefield)
Mikardo, Ian.
Wallace, H W


Grenfell, Rt. Hon. D. R.
Mitchison, G. R
Watkins, T. E.


Grey, C. F.
Moeran, E. W.
Webb, Rt. Hon M. (Bradford. C)>


Griffiths, David (Rother Valley)
Monslow, W.
Weitzman, D.


Griffiths, Rt. Hon. James (Llanelly)
Moody, A. S.
Wells, Percy (Faversham)


Griffiths, W. (Manchester Exchange)
Morgan, Dr. H. B
Wells, William (Walsall)


Grimond, J.
Morley, R
West, D. G.


Gunter, R. J
Morris, Percy (Swansea, W.)
Wheatley, Rt. Hn. John (Edinb'gh, E)


Haire, John E. (Wycombe)
Morl, D. L.
White, Mrs. Eirene (E. Flint)


Hale, Joseph (Rochdale)
Moyle, A.
White, Henry (Derbyshire, N. E.)


Hale, Leslie (Oldham, W.)
Mulley, F. W.
Whiteley, Rt. Hon. W


Hall, Rt. Hon. Glenvil (Colne Valley)
Murray, J. D.
Wigg, G.







Wilcock, Group Capt. C. A. B
Williams, Ronald (Wigan)
Wyatt, W. L.


Wilkes, L.
Williams, Rt. Hon. Thomas (Don V'lly)
Yates, V. F.


Wilkins, W A.
Williams, W. T. (Hammersmith, S.)
Younger, Rt. Hon. K


Willey, Frederick (Sunderland)
Wilson, Rt. Hon. Harold (Huyton)



Willey, Octavius (Cleveland)
Winterbottom, Ian (Nottingham, C.)
TELLERS FOR THE NOES:


Williams, David (Neath)
Wise, F. J.
Mr. Bowden and Mr. Delargy.


Williams, Rev. Llywelyn (Abertillery)
Woodburn, Rt. Hon. A

Fifth Schedule.—(PURCHASE TAX (AMENDMENTS OF SCHEDULE OF CHARGEABLE GOODS).)

The Chairman: If the Committee would permit me for a moment, we now come to the Fifth Schedule, and if hon. Members will be so good as to refer to the Fifth Schedule in the Bill, they will see that the Schedule contains various groups beginning with Group 4, and going on to Group 5 and 6. If the Committee agree, I think it may be convenient to deal with the Amendments to that Schedule also by the same groups. If hon. Members will look at page 1484 of the Order Paper, they will see the first four Amendments in the names of the hon. Member for Thirsk and Malton (Mr. Turton), the hon. and gallant Member for Renfrew, East (Major Lloyd) and the hon. Member for Rushcliffe (Mr. Redmayne). All these four Amendments are included in Group 4 of the Fifth Schedule and, if the Committee would agree, we might perhaps discuss the selected Amendments in that group together. They are the second Amendment in the name of the hon. Member for Thirsk and Malton and the Amendment in the name of the hon. Member for Rushcliffe. May I take it that this is agreed?

Major Guy Lloyd: On a point of order. Is there any real connection between lining socks for shoes and elastic? Would it not be better for each hon. Member to move his Amendment?

The Chairman: That Amendment is not in order. The only two Amendments in that particular group that are in order are the second Amendment in the name of the hon. Member for Thirsk and Malton and the Amendment in the name of the hon. Member for Rushcliffe.

Captain Duncan: As it is your intention to take the two Amendments you have selected together, will you permit, if necessary, a Division to be taken on each Amendment?

The Chairman: I propose that they be taken together, and if a Division is

desired in any part of the Committee, of course I am perfectly agreeable.

Mr. Turton: I beg to move, in page 45, line 12, at the end, to insert—
(i elastic … … … … Exempt.
I regret very much that the Chancellor of the Exchequer, on a previous Amendment, described this Purchase Tax as a revenue tax. In my view, it has a very great effect on the cost of living and on the community as a whole, and I would prefer the definition of this tax which the right hon. Gentleman gave in his Budget speech on 10th April, when he said that the aim of Purchase Tax was to a large extent the raising of revenue and the withdrawing of spending power to check inflationary tendencies.
I cannot believe that the Purchase Tax on elastic is in the category of a tax to check inflationary tendencies. I would have thought it was just the reverse. The right hon. Gentleman went on to say there was no overwhelming reason why we should not raise revenue by taxing certain types of expensive clothing. Again, I should not have thought that elastic came in the category of expensive clothing.
The facts of the case are that in 1939 and in the days before the war three yards of elastic could be bought for 1½d Three yards today cost 10½d. of which 1¾d. goes in Purchase Tax. I ask the Committee to remove the Purchase Tax on elastic which is surely, if anything is, a necessity of the home, and thereby reduce the cost of living by lad. on every three yards of elastic. I hope that will be agreeable to hon. Members on whichever side of the Committee they sit, and I hope that the Financial Secretary is not going to tell me that elastic is a luxury and should be taxed, for I cannot believe that will be agreeable either to his constituents or to the country at large.

Mr. Redmayne: The Amendment which is in my name and the name of my hon. and gallant Friend the Member for Renfrew, East (Major Lloyd) seeks to exempt from Purchase


Tax insoles, except insoles made wholly or partly of fur skin. Insoles are sometimes called shoe socks and are made of cork, wool, canvas, felt or sometimes loofah. They are not in any sense a luxury. They are also one of the few remaining items that are an accessory to boots and shoes that still bear tax. These insoles are in use constantly in industry, agriculture and fishing. In the case of rubber footwear, they are used in the form of felt to absorb perspiration and are very necessary for that purpose in that type of footwear. I do not know whether they absorb the perspiration of good will to which my right hon. Friend the Member for Woodford (Mr. Churchill) referred, because I do not know from where that is exuded.
Of all footwear soles 95 per cent. are utility, and therefore it can be said that since the other 5 per cent. are entirely in the luxury trade and are sold to the type of person who buys that 5 per cent. to fit, the question of insoles does not come into that 5 per cent. of the trade at all. Therefore, in the other 95 per cent. of cases these insoles are to be regarded as an absolute necessity for those persons who buy them. From the point of view of the general public, these insoles are more often than not bought to make a fit for shoes that are perhaps not sufficiently well made to be an exact fit, and are particularily bought by fathers and mothers who are pressed by the rising cost of living and who buy shoes sufficiently large to allow for the growth of their children's feet.
The other type of insole is that type which is known as lining socks and seat socks which are fitted into the shoe as a lining to prevent rivets, nails and sewing coming through, and they equally, unless they are made of leather, are subject to tax, and should in my opinion be free from tax. In many cases these are stamped with the utility mark applying to the shoe as a whole and it is absurd, therefore, that these should bear a tax. By accident it so happens that lining socks and seat socks are included in another group, but it is obviously an illogical argument to say that if one group for Purchase Tax in which insoles are included should be exempt from tax, therefore the same argument should apply to the other group.

12 midnight.

Major Lloyd: I wish to express my sympathy with and support for the remarks of my hon. Friend the Member for Rushcliffe (Mr. Redmayne). I was hoping very much that the Government would not lose a great deal of revenue by making this small and very reasonable concession, for
One touch of nature makes the whole world kin …
Those of us who have suffered from blisters on our feet as a result of not being able to have insoles in our shoes and boots may fully realise how very important to our comfort is this matter. Nor is it a matter in which one class only are interested. All people are equal here and in that respect I concede the Socialist principle of equality.
I hope the Government will be sympathetic to this very simple Amendment. Why on earth an insole, which to all intents and purposes is part and parcel of footwear, should have to bear an unnecessary and expensive Purchase Tax, I cannot conceive. Such a simple concession would give pleasure to millions. I appeal to the Government to make it on the basis of fair shares and equality for all.

Mrs. Jean Mann: I want to apologise to the Committee, and particularly to hon. and right hon. Members opposite, for keeping them out of their beds at this time of the night. I know they are not accustomed to facing the hard ways of life as we are on these benches. It comes rather hard and very difficult for them to face some of the hardships which to us are merely normal. However, I think the hon. and gallant Member for Renfrew, East (Major Lloyd) will be glad to know that I want to support his plea. I do not think that the Chancellor would want to do anything to discourage thrift, and I feel pleased that he has exempted paper patterns, for example, and needles and thread.
It is very necessary he should have another look at this matter. Indeed, I appeal to him to save our insoles. Hon. Members opposite have pointed out, quite rightly, that insoles extend the life of a pair of shoes. Very often the shoes that one buys and brings home are found to be too large, but they can be worn if a pair of insoles are bought. The life


of the shoes is extended and that means a lot in a working-class home. I have noticed all over the country a great many notice boards over the windows of boot repairers. These notices intimate a half-hour's service for heels. I think that quite a lot of heels attend and have their shoes repaired in half an hour. This proposal may prevent, in quite a large number of homes, mothers having to go out and buy another pair of shoes that fit, and I hope my right hon. Friend will look at this very simple request, and if it is possible, grant it.

Mr. Jay: Perhaps at the outset to the Amendments to this Schedule I might just say this. I think we all agree that there have been difficulties in conducting this particular type of debate, and I would suggest that the best thing, at any rate as far as we are concerned on this bench, would be to do this. I suggest that we should listen to the arguments advanced by hon. Gentlemen on each individual commodity, and then at the end of the group of Amendments I or my hon. Friend should indicate in which, if any, of those matters we think that a case has been made for giving consideration to the matter before the Report stage. We would indicate clearly which falls into that category and which does not.
I should also say that clearly this year we have very little scope for relief. We have to see these individual Purchase Tax proposals in relation, of course, to the rest of the Budget, and as the hon. Member for Orkney and Shetland (Mr. Grimond) said earlier, this is not the moment radically to reduce the Purchase Tax. As, therefore, the total relief on the group of exemptions we proposed in the Budget this year was only £2,500,000, obviously there is only very small scope for any further possibilities.
If we look at the two Amendments before us, they both relate, of course, to the group known as haberdashery, which covers a remarkable number of commodities, which nevertheless all come within the rough trade classification of haberdashery. When we considered that group before the Budget, we decided that we could select two different types of goods in it on these principles. First of all, we selected boot and shoe laces because it so happened, as I think the hon. Gentleman said about the insoles, that there were no utility boot and shoe laces,

although 90 per cent. of boots and shoes on the market are now utility. Secondly, we selected from the haberdashery group those tools—if one likes to call them that— used by the housewife in the course of making or repairing clothes in the home to which my hon. Friend referred.
If against those principles we examine these proposals, firstly for elastic, and secondly for insoles, the conclusion I come to is this. I do not think any case is made out for further consideration of elastic because it does not fall into either classification, and therefore if we were to extend the exemption to elastic we should be involving ourselves, within the haberdashery group, in more of those anomalies about which hon. Gentlemen opposite find it so easy to make such entertaining speeches.
On the other hand, as far as insoles are concerned, having listened to my hon. Friend and the hon. Gentleman opposite, it does seem to me, without too much stretching of the elastic, that there is some case for considering them in relation to the boot and shoe laces. I will therefore undertake to consider the case of insoles before the Report stage.

Mr. Selwyn Lloyd: In order that we may get the matter right—as the hon. Gentleman referred to the figure of £2,500,000—would he be good enough to tell the Committee how much the elastic concession would cost, how much the insole concession would cost, how much the laces concession has cost, and how much the sewing and darning and paper patterns concession has cost?

Mr. Jay: I cannot give the hon. and learned Gentleman all these figures. The elastic and insoles amount together to a very small sum, something under £100,000, but I was basing my argument here mainly on the classification rather than on the actual cost.

Mr. Lloyd: If we are to deal with these Schedules in a reasonable manner, we must know what the financial implications are. I should have thought it intolerable that the hon. Gentleman should come to the Committee without being able to say in regard to each of these items what the cost would be.

Mr. Jay: So far as elastic and insoles are concerned, the cost is exceedingly small.

Mr. Turton: The hon. Gentleman is asking the Committee to reject my Amendment on elastic, but has given no information on the financial implications. I hope he will get the information and give it to the Committee.

Mr. Charles Williams: My hon. Friends are quite justified in asking for this figure, but I cannot see why they are surprised at the Treasury not having it. It has been very rare, throughout our discussion, for the Treasury to know anything about any of these things, and why should we expect them to know now? We and the country have a right to them, but we are not having the normal method when the Budget is discussed of details being given so that we may know what a concession will cost. It is a new policy, and it is a Socialist policy.

Mr. Joynson-Hicks: May I have some clarification of this figure of £2,500,000? Was I right in understanding the hon. Gentleman to say that the concessions the Government have introduced into the Fifth Schedule as a whole are estimated to amount to £2,500,000? If that is so, what was the relevance of his remark that it was therefore only possible for the Government to contemplate making very minor concessions of further advantage? I should have thought that the logic was the other way round: that if the existing concessions were of such a comparatively insignificant total, there must be more money available for further exemptions to meet the Amendments which have been put down from this side of the Committee.

Mr. Jay: The point I was making was that if in our general view of the Budget we estimated that there was scope for relief of £2,500,000 in respect of Purchase Tax exemptions, it was clear that on that general principle there was little scope in terms of revenue for any further concessions.

Mr. Godfrey Nicholson: Can the hon. Gentleman say what that scope is? How much have we to play with? He must have some idea how much he can afford to give away.

Sir Ian Fraser: May I put the question in another way? How much of the £2,500,000 has

gone already, and how much is available for the next Amendments?

Mr. Jay: The £2,500,000 has already been conceded in existing proposals included in the present Schedule.

Captain Crookshank: When the hon. Gentleman was replying to the original submission, he pointed out that these two, elastic and insoles, were not within the group which the Government had decided to relieve. Of course, that was quite obvious. Neither elastic nor insoles are boot laces or needles. The hon. Gentleman did not have to tell us, because we could have read that for ourselves. They are quite different commodities used for quite different purposes.
12.15 a.m.
I rise only to ask the hon. Gentleman if he will amplify what he said just now. To give these two concessions, he said, would cost £100,000 or thereabouts; but he could not say what either elastic or needles would cost separately. Well, it seems to me that if they have got a total for the two things, somebody must know what the sum for each of the two things is separately, otherwise how could they tell us of the total of £100,000. It was a perfectly legitimate question that my hon. Friends have asked, and I hope that the Financial Secretary can break up his £100,000 into two, so that we can decide for ourselves whether this matter is worth pursuing. It is the elastic point which he has not so far conceded.

Mr. Jay: I am only too anxious to help the right hon. and gallant Gentleman. I am sorry if I misunderstood the question. What I intended to say was that the cost of the proposal which I undertook to consider—that is to say, insoles —would be something under £100,000. The cost of the elastic, which I had excluded—and I intended to make it clear that I had excluded it—would be something over £250,000.

Captain Crookshank: I am much obliged to the hon. Gentleman for clearing up that point. I was not clear from what he said. I understood it was the total for the two. I apologise, but I think it was his own lack of clarity that led to the mistake.

Mr. Selwyn Lloyd: May I add to my right hon. and gallant Friend's question,


however? I think it applies not only to this Amendment but also to all the others. The Financial Secretary started by saying that the Government had only £2,500,000 to give away, and that they had already given that away. That cannot be true, because the hon. Gentleman has already admitted to the Committee that he is going to consider the question of the £100,000 and insoles. May we be told now what are the financial limits within which we are going to discuss these matters? How much has the hon. Gentleman got within his discretion in these matters? Is the limit £100,000, or is he going to consider other items?

Mr. Jay: I do not know how long we should continue this. What I intended to convey by my original remarks was that I wished, if it was desirable, that we should conduct this debate otherwise than as an auction. I have no figure in my head—no precise figure. What I intended to say was that I would listen to the arguments and consider them on their merits; but I wanted to indicate roughly that, as the total relief we originally intended was something like £2,500,000, it was clear that we could not add to that reliefs running into millions of pounds. I do not think I can put it more precisely than that.

Captain Crookshank: I am much obliged to the hon. Gentleman for the explanation he has given. In view of the fact that elastic would cost as much as £250,000 I would hope that my hon. Friends would not press the matter further. However, I should like to ask, so that we may know for our future guidance when these matters are being discussed, whether we can take it that if the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) gets up and says, "This is a good thing," that is an indication that the Government are about to accept it?

Mr. Logan: I am very edified by the remarks of the right hon. and gallant Member for Gainsborough (Captain Crookshank), and I am also edified by the magnificent manner in which hon. Gentlemen opposite have dealt with elastic. We started this discussion at 11.40, and the Tory Party have been elastic in dealing with it, and with insoles. [HON. MEMBERS: "Why not?"] I am talking to all hon.

Gentlemen opposite. My criticism of hon. Gentlemen's interventions is that all this is a waste of time, and that they have no right to carry on in this style in this Committee.

Lieut.-Commander Braithwaite: I am sure we all have great respect for the hon. Member for the Scotland Division of Liverpool (Mr. Logan), but his criticism is hardly fair. After all, we are discussing what is on the Order Paper, and it would be difficult for us to discuss anything else. Moreover, we endeavoured some time ago to ensure that this discussion took place at an hour which the hon. Gentleman might think more convenient. We are also working, as the hon. Gentleman is aware, under the new dispensation, which lays down that if the Sittings of the Committee continue until public transport has ceased to run, the right hon. Gentleman likes them to continue until breakfast time.

Mr. Logan: We can sit until tomorrow night.

Lieut.-Commander Braithwaite: By making speeches no doubt the hon. Gentleman can achieve that. But now that we have got back to a calmer atmosphere, I want to ask the Financial Secretary whether my understanding is correct, that all these discussions on which we are now embarking are to be laid in abeyance while the right hon. Gentleman reconsiders these proposals between now and Report stage? In other words, none of them will be acceptable at this stage, but those which find favour with the hon. Gentleman, if any, will appear on the Order Paper on Report stage as Government Amendments to ensure their discussion? If that is so, it clarifies the circumstances under which we are working. I hope he will allow me to say, in all good temper, that if this is not a Dutch auction, it is very like it.

Amendment negatived.

Mr. Fort: I beg to move, in page 45, line 24, after "cotton," to insert "or rayon."

The Deputy-Chairman: I think it will be for the convenience of the Committee if this Amendment were discussed with the subsequent Amendments standing in the name of the hon. Member in lines 26, 28 and 38.

Mr. Fort: In moving this Amendment, I hope to put up one of those cases which the Financial Secretary said he would undertake to consider on its merits. Perhaps there is little need to do more than move this formally, because I suspect that the omission of the words "or rayon" after cotton may be accidental.
When introducing the Budget some months ago, the Chancellor said that he would exempt from Purchase Tax the more necessary household articles, and in carrying out this pledge he has introduced into the exempt class under the Fifth Schedule a large range of washing and dusting cloths. But these have been confined to cloths made from cotton and the words "or rayon" were omitted. There are good reasons for including cloths made out of rayon. Housewives should have as wide a choice of cloths as possible, but certain rayon cloths are as suitable as and perhaps more suitable than those made out of cotton.
At the present time, and as far ahead as one can see, cloths made from cotton have a larger dollar content than those made from rayon, because most of these cloths have to be made from American cotton, although some substitution is possible, whereas those from rayon do not, because the pulp from which rayon is made comes to this country from many parts of the world but not from the United States of America. There is a feeling among those who weave the rayon cloth that they have been a little unfairly treated. The rayon industry has developed more recently than the cotton industry, and consequently about 240 cloths made from cotton have been included in the utility range free from Purchase Tax, compared with about 14 made from rayon. Therefore, there is a good chance that manufacturers of rayon cloths will be tempted to use cloths which are not really designed for these household purposes to try to benefit from Purchase Tax exemption.
Furthermore, there is a danger that unless rayon is exempt there will not be that development of proper household cloths made from rayon that those concerned with the industry hope to see. It is for these reasons that I hope the Financial Secretary, when he comes to consider this matter, will be able to see his way to include rayon with cotton

among the cloths included in Group V of Schedule 5.

Mr. Jay: I am afraid that this time I am bound to disappoint the hon. Member for Clitheroe (Mr. Fort). We did consider this matter carefully before the Budget, and it was not by accident that we omitted rayon when we included cotton. The difficulty was simply that we wished, if we could, to exempt dusters, as they are generally used in the home, but if we were not careful in doing that we would exempt a large number of textile squares which could be used for other purposes, such as decorative scarves, which would have involved a loophole for evasion.
We came to the conclusion, after consultation with the trade, that the only possible way to administer this and make it workable was to confine the concession to cotton. I understand that the trade was quite satisfied, as were the Customs and Excise, that the concession would not be workable and could not be made workable if we went beyond cotton. In those circumstances, it would not be any use undertaking to consider this matter further.

Viscount Hinchingbrooke: Could you at this stage, Sir Charles, give us some guidance? If one wants to make a comment about an item in Group V, paragraph 2, which is not the subject of an actual Amendment, should one make it before the Financial Secretary makes his reply to each, as I understand he is going to do, or wait until the Motion that the Schedule be the Schedule to the Bill?

The Deputy-Chairman: I think it would be better to wait until the Motion.

Sir William Darling: Nothing could more justify the case recently made by my right hon. Friend the Member for Leeds, North (Mr. Peake), for an advisory committee to help the Chancellor of the Exchequer than the speech we have just heard from the Financial Secretary. In line 22 the advisers to the Government in this technical matter agree that scouring or dish cloths can be made from cotton or jute but not from cotton or rayon.
12.30 a.m.
When one comes to Clause 8, the argument of the Minister that squares which were made of cotton and rayon


would be used for scarves, head coverings, and indeed for dresses, has not been fully met, because cotton dusters, woven in a single piece and having, except for a border on each of the four sides, an over-all check pattern of coloured yarns, and not exceeding 24 inches in length or width, will make an excellent washing frock. There the ingenuity of the Minister has been defeated. In his desire to avoid the sale of dusters for dress purposes, he has been unable to match the ingenuity which discloses itself in garments of squares in an over-all check pattern of coloured garments not exceeding 24 inches in length or width.
I have sympathy with the Minister as he flounders in this haberdashery world. He was obviously at sea in the world of elastic. He is obviously more at sea in the world of cotton and rayon. There is nothing to be ashamed of in being ignorant of this trade. Neither will he have anything to be ashamed of if he takes this matter back and gives it further consideration. I think he will then see that he is not achieving the object which he has in view, which is to prevent people making clothes out of dusters. I am glad that the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) is here to support me.

Mrs. Mann: I am sorry, but I cannot support the hon. Member on two counts. Firstly, on the ground that dress materials are 36 inches and 54 inches in width. Secondly, any housewife will tell him that rayon makes a most unsatisfactory duster, dish cloth or anything else mentioned in the Schedule. If the hon. Member had been doing his duty and helping with the washing up he would never hale made such a mistake.

Sir W. Darling: In talking about dress fabrics the hon. Lady is completely at sea. She said the widths of fabric are 36 and 54 inches, but the standard widths are 36 and 48 inches. I feel compelled to say that, as we are compelled to stay. after the plea made by the Leader of the Opposition that we should go home has been rejected, we must help the Minister to achieve his object. He is not doing that. My hon. Friends and I will be happy to tell him why he is not getting what he wants in this Schedule. We will still make garments

out of 24 inch squares of cotton mixtures. and very pretty they will be too.

Mr. Fort: May I answer the hon. Lady the Member for Coatbridge and Airdrie about the rayon industry. I can supply to her rayon washing cloths which will be superior to those made from cotton. She is not keeping up-to-date with the latest developments in the rayon industry.

Amendment negatived

Mr. Turton: I beg to move, in page 45, line 38, at the beginning, to insert: "butter muslin and".
When the Chancellor introduced this Finance Bill, we found that among articles in Group 6 which were to be exempt from Purchase Tax, was
knitted unbleached cotton cloth made with at least one needle omitted in every fifty needles.
Now, it may be that many hon. Members, like myself, did not know what this meant, and so I tried to obtain a little information from those in the trade; and I was told that what the Chancellor is trying to exempt is cloth in which imported mutton was wrapped, when mutton used to be imported. That, of course, was in the days before the present Secretary of State for War, or the present Minister of Food, had any share in our administration.
But this decision is not satisfactory to the general body of citizens in this country. In this Group 6, the greatest injustice which I can find is this tax on butter muslin, for this is an essential fabric for keeping food clean. It is used in the rural areas in considerable quantities and before the war the price of it was 4d. a yard. Today, the price is 2s. 1d. a yard—an increase of 600 per cent. since 1939.

Mr. Hector Hughes: There has been a war since then.

Mr. Turton: The hon. and learned Gentleman is very aware of recent history; but apart from the war, the Treasury have been taking 8d. a yard in Purchase Tax; and butter muslin is not something used for extravagant purposes, but to prevent food deterioration. Yet the rate of Purchase Tax on this most essential article is 66⅓ per cent. I beg the Treasury to have regard to this fact, for here is one of the greatest of anomalies in Purchase Tax at the present time.
We are all anxious to do all that we can to preserve foodstuffs and prevent outbreaks of disease in them, and in rural areas—and in the towns—butter muslin is a most important adjunct to that purpose. Why, therefore, should it be taxed at the luxury rate of 66⅔ per cent.? Surely the case is that. rather than exempt this nonexistent mutton cloth, the Chancellor should exempt butter muslin.
I ask the Financial Secretary to advise the Committee to accept this Amendment or, in the alternative, to reduce the Purchase Tax from this very high rate of 66⅔ to 33⅓ per cent. If he does that, he will get the gratitude of all hon. Members who live in or represent rural areas and who wish to conserve our very valuable food supplies.

Mr. Macdonald: I should like to speak to my Amendment in page 45. line 39. at the end, to insert:
(q) non-utility tweeds made in Scotland exceeding three inches in width … First.
We wish to remove these cloths from the second rate of tax of 66⅔ per cent. to 33⅓ per cent. The Scottish tweed trade has for long had the unique honour of being one of the highest dollar producers per head of people employed throughout the whole country, but the success of this trade has been built on the high quality of the tweed. This is a result of the craftsmanship put into it, and because of the very delightful patterns that the material shows. Since the war, the bulk of the output, however, has been exported, but increasing sales resistance—

Viscount Hinchingbrooke: On a point of Order. Did you actually put the Amendment moved by my hon. Friend the Member for Thirsk and Malton (Mr. Turton)?

The Deputy-Chairman: Yes, I put that Amendment, but I do not think the hon. Gentleman understands the procedure. The hon. Gentleman the Member for Roxburgh and Selkirk (Mr. Macdonald) is talking on this Amendment now and if he wants a Division, it can be moved afterwards. We are on Group 6 now and this Amendment can be discussed with that dealing with butter muslin.

Mr. Macdonald: As I was stating, since the war the bulk of the output of

this industry has been exported, but increasing sales resistance in the export markets is now being experienced due to the high price of wool and this leaves an increased amount of tweed available for sale in the home trade. The industry usually depends for its main support upon the home trade, and it is rapidly becoming apparent that, with the narrowing export trade, the industry may face serious unemployment unless it can sell these goods in the home market. This is practically impossible now due to the 66⅓ per cent. Purchase Tax on the already very high cost of production, and the home trade will almost certainly cease altogether when wool purchased at the present high prices comes into production.
Though these mills can make very high-quality utility cloth, their production methods are not geared for the type of cloth and as a result they cannot make it as economically as it is made in Yorkshire. It is the opinion of the trade that a lower Purchase Tax rate would yield more revenue by increasing production and making larger sales possible in the home market while catering for full export demands. By so doing, the continuance of this very valuable craft industry would be assured. I can assure the Financial Secretary that there is scope for greater production here for the home market without in any way denying sales to the export trade.
It is essential that this very valuable industry, this craft industry, should be encouraged to develop its home trade to the full, but unless some assistance can be given by substantially reducing the rate of Purchase Tax, things will be made quite impossible for it and as the result, as I have said before, serious unemployment may occur and these very valuable craftsmen may be lost to this country and this industry.

Mr. Grimond: As the question of tweeds is under discussion, I rise to put in yet another plea to the Financial Secretary on behalf of handwoven tweeds.

The Deputy-Chairman: I did not select that Amendment.

Mr. Grimond: I thought it was in order to discuss Purchase Tax on quality tweeds.

The Deputy-Chairman: I gathered from the hon. Gentleman's opening remarks that he was dealing with his Amendment, which has not been selected.

Mr. Grimond: No, Sir. I appreciate you have not selected that Amendment but I understood that this Amendment dealt with non-utility tweeds and that therefore I would be in order. I hope to get some support not only from Scotland but also from England, Wales and even Northern Ireland. In all those countries there is a certain amount of this handwoven tweed produced, though, of course, it is not as good as the tweed produced in Scotland, particularly in the North of Scotland.
This is a matter upon which I and other hon. Members have approached the Financial Secretary before and I am afraid I am pessimistic enough to believe that we may have to do it again. This matter is becoming more and more urgent owing to the very high prices which wool has now reached. I must say that if this industry, which has a very high reputation, were to be seriously endangered, it would be a very serious blow to one of the quality products for which this country is famed.
12.45 a.m.
The importance of handwoven tweed is, first of all, that this weaving gives employment in the more remote and thinly-populated areas of the country where it is extremely difficult to find anything for young men to do. It is an industry which relies on the local product, and the value of the finished product is greatly enhanced by the processes of manufacture. This is very important because, if you want to start up any industry in these areas, it is important you should find something of which the cost of buying and transporting the materials is not a very high proportion of the final cost. Otherwise you are killed by the freight. Freights are a subject on which I could dilate at some length, but I will spare the Committee as I should be out of order. It is also, I think, particularly useful in that it can be combined with the kind of agriculture carried on in these areas—in Scotland, in particular, crofting.
I urge upon the Financial Secretary if the Government are sincere, as I am sure they are, in their desire to increase the population of these areas and make them play a useful part in the economy of the

country, that this is the sort of industry which should be encouraged. It has received a very serious setback owing to the increase of Purchase Tax, now some two or three years old.
The reasons against it, I know, are that, first it is difficult to distinguish handwoven tweed from any other sort of tweed. But I believe that the Financial Secretary and his advisers, with their great knowledge, if they really put their minds to this matter, would be able to find a way of distinguishing this tweed by a mark or some other method. If behind this industry there were really powerfully organized interests, some method would have been found long since. In the areas where this tweed is of importance, it is a vital industry, and although the total number of people employed may be small over the whole country, in some areas in which they live the weavers are the bulk of the population.
The other reason is that the Government would lose a certain amount of revenue. I do not know what the revenue might be. It may be £500,000, if sales remained at the present level. I am not suggesting the hon. Gentleman should abolish the Purchase Tax on this tweed, but if he were to reduce the Purchase Tax he would have greatly increased sales and therefore a greater revenue. He will no doubt argue it is desirable that this tweed should go to export as far as possible, and if the producers want to sell on the home market, they can produce a second category of utility tweed.
Certain producers have tried to bring this tweed into the utility category, but with the increasing price of wool, it is becoming increasingly difficult to do that. It is almost impossible for the weaver to weave two categories. He will rightly concentrate on the higher quality, because it is quality which counts in this matter. There is a great danger if you try to debase it, or bring it down to a lower category, that you will lose its name and reputation on which sales ultimately depend. I hope once again that the Financial Secretary will look at this matter and will possibly be able to say something favourable on it.

Mr. Malcolm MacMillan: I should like to say a few words in support of the argument of the hon.


Member for Orkney and Shetland (Mr. Grimond). This Harris tweed industry at present exports to the dollar area 80 per cent. of its production. I think that is a pretty reasonable percentage of its production, and I think that is a good export effort. Nobody could charge the industry with not having tried to earn dollars during the time when dollar earning was priority No. 1, and it is not unreasonable to ask for certain concessions or, as I view them, certain rights in respect of the home market.
It may be that difficulties will arise in respect of the American and Canadian markets in the future, and therefore the home market will become increasingly important to the people in this industry. Let us remember that we are dealing here, not with any big organisation, but with hundreds of small producers up and down the islands of the Western Isles, who are already in considerable difficulty through remoteness, high freight charges and other disabilities of various kinds.
Purchase Tax of 66⅔ is unquestionably a most unreasonable imposition on the products of a small cottage industry of this kind which is already labouring under these exorbitant freight charges, and I appeal to the Financial Secretary on behalf of these people who are trying to live in difficult conditions in areas where there is no alternative full-time employment and no other way of making a reasonable income and achieving a reasonable standard of living by present-day standards.
I am sure that if hon. Members on this side of the Committee knew the actual conditions under which the people have to work and try to earn their living by weaving as a supplementary income to difficult enough crofting, they would support the reduction of Purchase Tax on this type of non-utility tweed. The people have taken great pride in producing quality articles, as the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) has said. The industry has this further advantage, that it can be carried on under conditions that enable it to comply with the Board of Trade's definition of Harris tweed and thus qualify for the Board of Trade hallmark, which requires that the weavers must make the cloth in their own homes. Therefore, it is an industry which is suitable to the way of life of people

who like to combine fishing and crofting with weaving.
The people in the industry suffer from many disabilities, and even under our social security scheme these people are classified as out-workers and therefore do not qualify for Unemployment Insurance benefit. That is another of the disabilities from which they suffer along with the imposition of 66⅔ Purchase Tax as a deliberate act of policy.
According to a Treasury reply today to a Question I had on the Order Paper but which was not reached with other Oral Questions, about £1 million is taken out of Scotland annually— I am not going to say where it is taken; it might go back from—handwoven non-utility tweed. The Highlands of Scotland and the West-tern Isles produce about 90 per cent. of all the handwoven non-utility tweed of the United Kingdom, and the Transport and General Workers' Union representatives on this side of the Committee will be anxious to give some support to something like 1,300 or 1,400 paid-up members of that union who are the people who produce Harris tweed in the Western Isles. I appeal to them also to bring pressure to bear on the Treasury with regard to this 66⅔ imposition on the labours of their union members.
The hon. Member for Orkney and Shetland (Mr. Grimond), like myself, has gone into the homes of these people. It is not enough to quote Treasury statistics and tell us we are wrong about the total quantity of tweed going to export and to give us the production on paper. One must go into the homes of the people one knows to have been producing Harris tweed for years and find looms idle and people unemployed and denied Unemployment Insurance benefit, and having to search for jobs elsewhere in the United Kingdom and abroad, to know what is happening largely because of this exorbitant charge.
I beg the Treasury to have this matter re-examined. The Government are not really so very anxious to collect £900,000 out of the Highlands and Islands merely for the sake of collecting £900,000, because they must know that the result is to create unemployment and other problems to solve which they have to spend at least £900,000 again.


The hon. Member for Orkney and Shetland referred to the number unemployed in the Highlands and. Islands. One can multiply that figure several times as far as the Western Isles are concerned. These people are not registered as unemployed, they are not classified as "Class A" unemployed and their unemployment is not reflected in any statistics the Treasury are able to produce or the Ministry of Labour able to produce for the Treasury. It is not enough for the Financial Secretary to the Treasury to say that the production. of Board of Trade marked tweed has not fallen by more than so many yards, for there was other tweed produced beside that marked by the Board, and that has now gone out of production.
The fact remains that hundreds of men and their families are deprived of their livelihood to a large extent through this heavy imposition. If it is not reasonable to ask that it be wholly abolished, it is at least reasonable to ask that it be reduced from 66⅔ to a very much lower and more reasonable figure. I ask the Treasury not merely to quote statistics but to think in human terms, in terms of unemployment and of the danger of migration from the Highlands and Islands which it is the policy of this Government to try to avoid.

Mr. Jay: First as to the Amendment of the hon. Member for Thirsk and Malton (Mr. Turton) relating to butter muslin, I fear there are two difficulties which seem to me inseparable from his proposal. In the first place, muslin is, of course, one of many various forms of wrapping for food. It may be that at a time when we had rather more scope a case could be made out for reliefs, or if it were possible to find definitions, for exempting all textile materials used for wrapping food and keeping it clean which, as the hon. Member suggested, is a very desirable objective. However, I do not think it would be possible simply to pick out one type of food wrapping and alter the Purchase Tax on that alone.
Secondly, there is the practical difficulty, of which I think the hon. Member knows, that I am assured by all who have looked into this that the phrase "butter muslin" is not in fact a definition sufficiently precise to enable a tax distinction to be made. I am afraid that various forms of textiles could be given

that name, whether used for wrapping butter or not, and it would not be possible to operate the distinction effectively. That is the conclusion to which the experts have come, and for both those reasons we cannot entertain that particular suggestion.

1.0 a.m.

Mr. Turton: Is it a fact that the hon. Gentleman is suggesting that the Government's policy is that all food wrapping materials should be taxed at 66⅔ per cent.?

Mr. Jay: No, Sir. I was urging that if there was to be some special concession for one we would have to consider other materials also used for wrapping food.
Secondly, the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) and two other hon. Gentlemen have raised this question of handwoven tweeds which we discussed in Committee three years ago. As I think those hon. Gentlemen know, there is no subject to which more time has been devoted by the Customs and the Board of Trade in the last three years. The difficulty, of course, arises from the fact that this is not a special Purchase Tax on Scottish handwoven tweeds. It is part of the 66⅔ Purchase Tax on non-utility cloth.
If, therefore, some relief by way of tax reduction were to be given to these particular tweeds, it is necessary to define and distinguish hand-woven tweeds as against other types of cloth. That problem, I can assure hon. Gentlemen, has proved an exceedingly difficult one. Now, this particular Amendment would seek to solve it simply by adopting the definition of
non-utility tweeds made in Scotland exceeding three inches in width.
Hon. Gentlemen would agree that there are very serious difficulties in principle and practice in basing one's tax definition on a geographical area. Of course, Scotland is not the only part of the United Kingdom in which handwoven tweeds are produced. There is production in Northern Ireland, in some parts of the North of England, and in Wales. It would be exceedingly difficult for that reason to base a distinction in that way.
The really insurmountable obstacle is that the tax is not paid by the weaver in the Orkneys or Hebrides but by the tailor, wholesaler or merchant in Leicester or


Leeds, and at that point it is so difficult as to have proved impossible, precisely to distinguish handwoven from other types of tweed. I assure hon. Gentlemen that the eloquence of the speeches and representations made to us on this subject by Members of Parliament and others have been much more forcible than the high-powered pressure from other quarters, and that is why we have spent so much time on it.

Mr. M. MacMillan: But Harris tweed, which is about 90 per cent. of all the handwoven tweed, carries the hallmark awarded by the Board of Trade. It is a Board of Trade definition, and any infringement would cause the offender to be hailed before the courts. Do the Treasury trust the Board of Trade, and do the Board of Trade trust the Treasury? [HON. MEMBERS: "No."] If the answer is "no," I quite understand. If the answer is "yes," surely we have a Government-approved definition of what is Harris tweed. Surely a Board of Trade stamp, carrying a punishment for infringement, is definable in law?

Mr. Jay: I am fully aware of that, but the difficulty is that the hallmark applies only to Harris tweed and not to all Scottish handwoven tweed. That emphasises the difficulty with which I was dealing. It would also not meet the principle of not confining a tax to one particular area. When we considered this two years ago, the general conclusion was that if this industry, which we are all so anxious to maintain and foster, were seriously threatened with decline and collapse, it would probably be better to meet the position by way of subsidy rather than by way of tax exemptions which could not be worked in practice.
We felt that the export prospects of this industry were so good, and its record—particularly in the dollar area—so remarkable that no serious decline was threatened. There were admittedly difficulties in the period just before devaluation, but after that exports recovered. It is still true today, according to my figures—and I think the figures my hon. Friend gave coincided with them—that the quantity stamped by the Harris Tweed Association in the first months of this year shows that production is running at the same rate as last year. About 90 per cent.

of the products of the industry are being exported, and as all exports are free of Purchase Tax it appears that the Purchase Tax on what is admittedly a rather specialised luxury product for the home market is not causing serious difficulties to the industry.
We and the Board of Trade—and we are entirely at one on this aspect as on others—have always thought that if there were any serious threat of a simultaneous decline in exports and in the home demand for these handwoven tweeds, the solution was for the industry to bring its products within the utility scheme. The Board of Trade have made arrangements to make that possible. So far the industry, for reasons which seem good to it, has not decided to accept that offer. We still think it a sound offer, which would be to the advantage of producers and consumers. For these reasons, it does not seem to us that any case has been made for altering the tax.

Mr. Macdonald: The hon. Gentleman has not replied to my Amendment, which does not deal with handwoven tweeds. The Scottish tweed industry about which I spoke has done its utmost to maintain a valuable export trade, which is now being reduced through sales resistance, and will continue to be further reduced because of the high price of wool. It normally depends on the home market, and it cannot retain that market because of the excessive Purchase Tax.
Is the hon. Gentleman going to do anything to assist the industry? For its total production to come within the utility scheme, as he suggests, would absolutely ruin the Scottish tweed trade, as it would the handwoven trade. I beg the hon. Gentleman to give further consideration to this Amendment, otherwise mass unemployment is likely through the restriction of its export trade and the inability of the manufacturers to sell in the home market.

Mr. Niall Macpherson: I want to add a word because the reply that has been given by the Financial Secretary really will be extremely disheartening to the various areas concerned. It may be understood in the areas that, so far, there is something to be said for maintaining the higher Purchase Tax at the moment. But if the hon. Gentleman is going on to say that, when the time


comes when sales abroad have fallen to a considerable extent, and when there is no sign of the extra supply so available being taken up by demand in this country, the only solution is to jettison all the skill and craftsmanship and pride in their work that there are in the tweed producing areas, and for them to go into utility schemes, then he is asking them to sacrifice all that they have stood for, and all that they have striven for, for a very long time.
If that is the only solution he can suggest, he must think again. I would say that he ought to think again now on this subject, because there is no doubt at all that, unless demand can be maintained in this country for high quality goods, those areas are doomed. Experience has proved in the past that they cannot compete on the cheap, mass production basis, and unless high quality demand can be maintained they are doomed.
There are indications already that that demand is not being maintained. Only the other day I received a circular from a well-known tailor in Edinburgh indicating that he had to change his policy entirely because demand for high-quality tweeds and other materials was no longer being maintained. If that decline spreads all over the country it will mean that the output will gradually fall in the high-quality materials. If that happens, we shall have the same kind of disaster in the Border tweed-producing areas and in the handloom areas in the Highlands as occurred before the war. I hope the hon. Gentleman will really consider this matter very seriously. I hope he will consider it again if and when the demand falls for the high-quality tweeds.

Amendment negatived.

The Deputy Chairman: Does the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) wish to divide on his Amendment?

Mr. Macdonald: I feel so strongly on this matter, and I think the Government's reply was so inadequate, that I propose to take the Amendment to a Division.

Amendment proposed: In page 45, line 39, at the end, to insert:
(q) non-utility tweeds made in Scotland exceeding three inches in width … First."—[Mr. Macdonald.]

Question put, "That those words be there inserted."

The Committee divided:

Mr. Churchill: (seated and covered): On a point of order. May I draw your attention, Sir Charles, to a flagrant and obstinate breach of the rules and regulations of the House by the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) who for a number of minutes stood stationary, and also draw your attention to the grave injury and danger that might arise if hon. Members took the opportunity of Divisions to stand about in fixed positions on the Floor of the House, whereby they might obstruct the movement of other hon. Members and lead very easily to a breach of the peace.

The Deputy-Chairman: Hon. Members, when they are standing, must keep on the move.

Ayes, 53; Noes, 264.

Division No. 146.]
AYES
[1.19 a.m.


Arbuthnot, John
Heald, Lionel
Peto, Brig. C. H. M


Baldwin, A. E.
Henderson, John (Cathcart)
Renton, D. L. M


Bennett, William (Woodside)
Higgs, J. M. C.
Roper, Sir Harold


Boothby, R
Hill, Dr. Charles (Luton)
Scott, Donald


Bullus, Wing Commander E. E.
Hill, Mrs. E. (Wythenshawe)
Stevens, G. P.


Butcher, H. W.
Hollis, M. C.
Stoddart-Scott, Col M


Craddock, Beresford (Spelthorne)
Howard, Greville (St. Ives)
Summers, G. S.


Crowder, Petre (Ruislip—Northwood)
Hutchison, Col. James (Glasgow)
Sutcliffe, H.


Cundiff, F. W.
Llewellyn, D.
Teeling, W.


Darling, Sir William (Edinburgh, S.)
Lockwood, Lt.-Col. J. C.
Turton, R. H.


Davidson, Viscountess
Longden, Gilbert (Herts, S.W.)
Tweedsmuir, Lady


Duthie, W. S.
McAdden, S. J.
Vaughan-Morgan, J. K.


Eccles, D. M.
McKibbin, A.
Wakefield, Edward (Derbyshire, W)


Fort, R.
McKie, J. H. (Galloway)
Ward, Miss I. (Tynemouth)


Fraser, Hon. Hugh (Stone)
Maclay, Hon. John
Wilson, Geoffrey (Truro)


George, Lady Megan Lloyd
Macpherson, Major Niall (Dumfries)



Gomme-Duncan, Col. A.
Marlowe, A. A. H.
TELLERS FOR THE AYES:


Harris, Frederic (Croydon, N.)
Mellor, Sir John
Mr. Grimond and


Harris, Reader (Heston)
Orr-Ewing, Charles Ian (Hendon, N,)
Mr. A.J.F. Macdonald.




NOES


Acland, Sir Richard
Gordon-Walker, Rt. Hon. P. C
Morley, R.


Adams, Richard
Greenwood, Anthony (Rossendale)
Morris, Percy (Swansea, W)


Albu, A. H.
Greenwood, Rt. Hon. Arthur (Wakefield)
Mort, D. L.


Allen, Arthur (Bosworth)
Grenfell, Rt. Hon. D. R.
Moyle, A.


Anderson, Frank (Whitehaven)
Grey, C. F.
Mulley, F. W.


Awbery, S. S.
Griffiths, David (Rother Valley)
Murray, J. D


Ayles, W. H.
Griffiths, Rt. Hon. James (Llanelly)
Nally, W


Bacon, Miss Alice
Gunter, R. J.
Heal, Harold (Bolsover)


Baird, J.
Haire, John E. (Wycombe)
Noel-Baker, Rt. Hon. P. J.


Balfour, A
Hale, Joseph (Rochdale)
O'Brien, T.


Bartley, P.
Hale, Leslie (Oldham, W.)
Oldfield, W. H.


Bellenger, Rt. Hon. F. J
Hall, Rt. Hon. Glenvil (Colne Valley)
Oliver, G. H.


Benn, Wedgwood
Hall, John (Gateshead, W.)
Orbach, M.


Benson, G.
Hamilton, W. W.
Padley, W. E


Beswick, F.
Hannan, W.
Paget, R. T.


Bevan, Rt. Hon. A. (Ebbw Vale)
Hardy, E. A.
Paling, Rt. Hon. W. (Dearne Valley)


Bing, G. H. C.
Hargreaves, A
Paling, Will T. (Dewsbury)


Blenkinsop, A.
Hastings, S.
Pannell, T. C


Blyton, W. R.
Hayman, F. H
Pargiter, G. A


Boardman, H.
Henderson, Rt. Hon. A. (Rowley Regis)
Parker, J.


Booth, A.
Herbison, Miss M.
Paton, J.


Bottomley, A. G.
Hewitson, Capt. M
Pearson, A.


Bowden, H. W.
Hobson. C. R.
Porter, G.


Bowles, F. G. (Nuneaton)
Holman, P.
Price, Philips (Gloucestershire, W.)


Braddock, Mrs. Elizabeth
Holmes, Horace (Hemsworth)
Proctor, W. T.


Brook, Dryden (Halifax)
Hoy, J.
Pryde, D. J.


Brooks, T. J. (Normanton)
Hudson, James (Ealing, N.)
Pursey, Cmdr. H


Broughton, Dr. A. D. D
Hughes, Emrys (S. Ayrshire)
Rankin, J.


Brown, Rt. Hon. George (Belper)
Hughes, Hector (Aberdeen, N.)
Rees, Mrs. D.


Brawn, Thomas (Ince)
Hynd, H. (Accrington)
Reeves, J.


Burke, W. A.
Hynd, J. B. (Attercliffe)
Reid, William (Camlachie)


Burton, Miss E.
Irvine, A. J. (Edge Hill)
Rhodes, H.


Butler, Herbert (Hackney, S.)
Irving, W. J. (Wood Green)
Richards, R.


Castle, Mrs. B. A.
Isaacs, Rt. Hon. G. A.
Roberts, Goronwy (Caernarvonshire)


Champion, A. J.
Jay, D. P. T.
Robertson, J. J. (Berwick)


Chetwynd, G. R
Jeger, George (Goole)
Robinson, Kenneth (St. Pancras, N.)


Cocks, F. S.
Jeger, Dr. Santo (St. Pancras, S.)
Rogers, George (Kensington, N.)


Collick, P.
Jenkins, R. H.
Ross, William


Cook, T. F.
Johnston, Douglas (Paisley)
Royle, C.


Cooper, Geoffrey (Middlesbrough, W.)
Jones, David (Hartlepool)
Shackleton, E. A. A.


Cooper, John (Deptford)
Jones, Frederick Elwyn (West Ham, S.)
Shawcross, Rt. Hon. Sir Hartley


Corbet, Mrs. Freda (Peckham)
Jones, Jack (Rotherham)
Shurmer, P. L. E.


Cove, W. G.
Jones, William Elwyn (Conway)
Silverman, Julius (Erdington)


Craddock, George (Bradford, S.)
Keenan, W.
Silverman, Sydney (Nelson)


Crawley, A.
Kenyon, C.
Simmons, C. J.


Crosland, C A. R.
Key, Rt. Hon. C. W.
Slater, J.


Cullen, Mrs A.
King, Dr. H. M.
Smith, Ellis (Stoke, S.)


Daines, P.
Kinghorn, Sqn. Ldr. E.
Smith, Norman (Nottingham, S.)


Dalton, Rt. Hon. H.
Kinley, J.
Snow, J. W.


Darling, George (Hillsborough)
Lang, Gordon
Sorensen, R. W.


Davies, A. Edward (Stoke, N.)
Lee, Frederick (Newton)
Soskice, Rt. Hon. Sir Frant


Davies, Harold (Leek)
Lee, Miss Jennie (Cannock)
Sparks, J. A.


de Freitas, Geoffrey
Lever, Harold (Cheetham)
Steele, T.


Deer, G.
Lever, Leslie (Ardwick)
Stewart, Michael (Fulham, E.)


Delargy, H. J.
Lewis, Arthur (West Ham, N.)
Stokes, Rt. Hon. R. R.


Diamond, J.
Lipton, Lt.-Col. M.
Strachey, Rt. Hon. J.


Donnelly, D.
Logan, D. G.
Strauss, Rt. Hon. George (Vauxhall)


Driberg, T. E. N.
Longden, Fred (Small Heath)
Stross, Dr. Barnett


Dugdale, Rt. Hon. John (W Bromwich)
McAllister, G.
Summerskill, Rt. Hon. Edith


Dye, S.
MacColl, J. E.
Sylvester, G. O.


Ede, Rt. Hon. J. C
McGhee, H. G.
Taylor, Bernard (Mansfield)


Edelman, M.
McInnes, J.
Taylor, Robert (Morpeth)


Edwards, John (Brighouse)
Mack, J. D.
Thomas, David (Aberdare)


Edwards, Rt. Hon. Ness (Caerphilly)
McLeavy, F.
Thomas, George (Cardiff)


Edwards, W J. (Stepney)
McNeil, Rt. Hon. H.
Thomas, Ivor Owen (Wrekin)


Evans, Abert (Islington, S. W.)
MacPherson, Malcolm (Stirling)
Thorneycroft, Harry (Clayton)


Evans, Stanley (Wednesbury)
Mainwaring, W. H.
Thurtle, Ernest


Ewart, R.
Mallalieu, E. L. (Brigg)
Timmons, J.


Fernyhough, E.
Mallalieu, J. P. W. (Huddersfield, E.)
Tomney, F.


Field, Capt. W J
Mann, Mrs. Jean
Ungoed-Thomas, Sir Lynn


Finch, H. J.
Manuel, A. C.
Usborne, H.


Fletcher, Eric (Islington, E)
Marquand, Rt. Hon. H. A
Viant, S. P.


Follick, M.
Mathers, Rt. Hon. G
Wallace, H. W


Foot, M. M
Mayhew, C. P.
Watkins, T. E.


Forman, J. C
Mellish, R. J
Webb, Rt. Hon. M. (Bradford, C.)


Fraser, Thomas (Hamilton)
Messer, F.
Weitzman, D.


Freeman, John (Watford)
Middleton, Mrs. L
Wells, Percy (Faversham)


Freeman, Peter (Newport)
Mikardo, Ian.
Wells, William (Walsall)


Gaitskell, Rt. Hon. H. T. N
Mitchison, G. R
West, D. G.


Ganley, Mrs. C. S
Moeran, E. W.
Wheatley, Rt. Ht. John (Edinb'gh, E.)


Gibson, C. W.
Monslow, W.
White, Mrs. Eirene (E. Flint)


Gilzean, A.
Moody, A. S.
White, Henry (Derbyshire, N. E.)


Gooch, E. G.
Morgan, Dr. H. B
Whiteley, Rt. Hon. W.







Wigg, G.
Williams, Rev. Llywelyn (Abertillery)
Wyatt, W. L.


Wilcock, Group Capt. C. A. B
Williams, Ronald (Wigan)
Yates, V. F.


Wilkes, L.
Williams, W. T. (Hammersmith, S.)
Younger, Rt. Hon K


Willey, Frederick (Sunderland)
Winterbottom, Ian (Nottingham, C)



Willey, Octavius (Cleveland)
Wise, F. J.
TELLERS FOR THE NOES:


Williams, David (Neath)
Woodburn, Rt. Hon. A
Mr. Popplewell and Mr. Wilkins.


Question put, and agreed to.

Colonel J. R. H. Hutchison: I beg to move, in page 46, line 26, to leave out "or gas".
I think that all Members will agree that one of the problems of today is undoubtedly to get coal. Some say that the economy of the country is being undermined because coal is not. Another problem running concurrently with it is how to save coal, and any modern method of cooking or space heating which will economise in fuel is something which we must consider with care.
I should like to read an excerpt from the report of the Scottish Gas Board for the year to March, 1950. It says:
Unfortunately Purchase Tax remains chargeable on gas water heaters, refrigerators, and domestic heating appliances. There is no relief even in respect of appliances which are required for new housing schemes, so that local authorities and private builders are reluctant to give favourable consideration to proposals for gas space heating and water heating installations. Relief would seem likely to encourage an advance in smoke abatement and fuel conservancy, in view of the superiority of gas fired equipment in these respects.
So that one of the bodies set up by this Government is, in fact, asking that Purchase Tax should be, if not eliminated, diminished for the type of articles which my Amendment seeks to bring to the Committee's notice. I must confess that it is extremely difficult to find out what exactly is covered, and some of us have puzzled over this for a long time. Whether the present proposals of the Government increase the tax upon any given article requires intensive and deep study.
The result of our study appears to show that the tax upon gas washing machines is to be raised from 33⅓ per cent. to 66⅔ per cent., putting them in the category of water heaters, space heaters and cookers, which are already at the 66⅔ per cent. level. That is far too high, particularly in view of the strictures which have been applied by the Scottish Gas Board.
I believe that technically the only Amendment I can move for the annul-

ment, or alteration, of the rate of tax is the Amendment in respect of washing machines. The others are already at the 66⅔ per cent. level. These machines are being treated in this way through a misapprehension. They are commonly regarded, I believe, as semi-luxury articles. When they are mentioned, the minds of hon. Members turn at once to electric washing machines and electric refrigerators costing about £100. But, in fact, this gas washing machine is a poor man's article. It consists of a hand operated agitator, and a clothes wringer.
I know how popular agitators are on the benches opposite. Hon. Members will see that this is an article which in toto costs about £15, and there is no attempt to sell it in the West End of London. There is no agency for this purpose. It is clearly an apparatus not used in the highest income groups. Being a hand operated machine, it saves electricity, and it consequently has a measure of fuel economy in it. It only heats the water by gas. The Purchase Tax, which is to be raised to 66⅔ per cent. is, I believe, imposed upon this machine through a misapprehension.
It was never realised by those who drafted the Purchase Tax rates that this article was a very different affair from the electric washing machine. Here, of course, is a very good example of the value of an advisory committee which my right hon. and hon. Friends have suggested earlier tonight, for this is one of the detailed matters which must have ecaped the attention of the Chancellor. An Advisory Committee could have said that this was something in the category in which it should not be.
There is another aspect. Many of these machines are now getting old and going out of use. But they will continue to be used if this Amendment is not accepted, with a consequent waste of fuel. Spares are difficult to obtain. In the national interest more of these articles should be in use and those already in use should be modernised. For these reasons, I ask the Government to accept the Amendment.

1.30 a.m.

Mr. J. Edwards: I think that if times were normal one would have listened with great sympathy to what the hon. and gallant Gentleman has just said; but, as my right hon. Friend stated in the earlier stages of discussion on this Bill, it is essential that we should have a reduction in home demands if we are to maintain our re-armament programme and sustain our balance of payments. The increase of tax here is not for fiscal and revenue purposes, although if this change now proposed was brought about it would cost £500,000. We hope that such a practice will be the alternative to the more extreme method of physical control, for we believe that if we can find a means of taxation, it is better to use taxation than the control to restrict consumption.
The particular machines to which the hon. and gallant Member refers are, as he says, hand operated; but he will appreciate that under his Amendment would be included gas refrigerators. Granted that the washing machine is worked by hand, then this does not get over the fact that these products are heavy users of sheet steel and nickel. As hon. Members know, sheet steel has already been placed on an allocation basis, and nickel has only recently been the subject of further restriction. Therefore, it would be very difficult on economic grounds to agree to this proposal.
I am glad to hear the opinion that we must economise in the use of fuel, but the hon. and gallant Member is seeking to distinguish between gas and electrical appliances. A few weeks ago I had a long talk with the secretary of the Electrical Development Association about proposals for tax increases in the electrical field. I do not think that I could get away with it if I told him that we were letting gas off but not electricity.
Maintenance of exports and the defence programme are the over-riding considerations here, and unless it can be shown that we can achieve our object in some other way we really must try to use the tax machine to curtail and reduce home demands so that we can divert resources to the defence programme, at the same time maintaining our exports. That applies especially in the engineering field, which is going to be the most hard pressed

by the defence and re-armament programme.

Miss Irene Ward: I have listened with very great interest to what the Economic Secretary has had to say on this matter, and I think he made one or two extremely good points. I rise to say, however, that the women of the country feel that sometimes, in taking decisions, the Government fail to take into account that if they are hoping to recruit female labour to help with the re-armament programme they should have some regard to allowing women to have some of these labour-saving devices in the home.
I wondered when the Economic Secretary said that he had had conversations with the secretary of the Electrical Development Association, if he had ever thought of having conversations with that section of the community which represents the Women's Electrical Association and the women on the gas councils, because they would both tell him a very great deal about how the women of the country are prepared to help with the re-armament programme if they can have a little consideration for their problems in the home from what is in the main a male-run Government.

Mr. J. Edwards: The secretary of the Electrical Development Association made this very point the hon. Lady is making, and made it very cogently to me, in the discussions we had.

Miss Ward: I am glad to hear that, because the Economic Secretary did not tell my hon. and gallant Friend, who moved this Amendment in very reasonable terms, that that particular point had been put forward. It would have been of very great interest if he had told the Committee that. But, of course, he was absolutely eliminating any consideration of the problems of the housewives of this country.
While I was listening to the Economic Secretary I was making up my mind whether I should intervene just to make these observations or not. I felt very strongly in the early stages of his speech that he did make one real point of substance, and that is the use of particular materials which are in short supply and are necessary for the re-armament programme. I think that point was a very reasonable one which I, as a mere Mem-


ber of the Opposition, would not be in any position to make any observations on, but I say, in all sincerity, that when the Economic Secretary or his colleagues come along and perpetually refuse consideration on any matters in which the women of this country are interested, he will get less co-operation than if he frankly put the whole of his cards on the table; he will then get cooperation and not obstruction.
I am bound to say that I am extremely tired of always hearing the case argued from the general point of view with no relation to the needs of the housewife, T want these remarks to be on record so that if any other cases are brought forward by my hon. Friends the hon. Gentleman will deal with not one aspect but with the much wider field. I think if he were to consult some of the appropriate women's organisations in this connection, or if he had an advisory committee with one or two women on it, he would learn a little more about running a house. Then we might have some reduction in the cost of living in these materials which help housewives to get their work through more quickly. I want to draw the hon. Gentleman's attention to that aspect.

Mr. Logan: At this early hour in the morning, the Committee having had a dissertation on washing machines, the hon. Lady has just woken up. If she knew anything at all about washing, she would not be here—not at this hour in the morning.

Miss Ward: I think this is a most interesting discussion. I should be very interested if the hon. Member would develop that argument. I dare say I have done a good deal more washing in a very much wider field—[Interruption.]

Mr. Logan: I am not going into a discussion of the width of washing. Nothing about dimensions at all and I say to the hon. Lady that the finest labour-saving machine she could have in the house would be a husband.

Amendment negatived.

The Chairman: The next group is Group 18, and the next Amendment is that in the name of the hon. Member for Hendon, North (Mr. Charles Ian Orr-Ewing), in page 46, leave out lines 40 to 43.

Mr. Charles Ian Orr-Ewing: I beg to move, in page 46. to leave out lines 40 to 43.
This Amendment is associated with the two Amendments in line 46. The object of these Amendments is threefold. Firstly, we hope that the Economic Secretary's heart will be softened and that he will leave the Purchase Tax unchanged on radio and television sets and on radio valves and cathode ray tubes. The second Amendment asks him to relieve valves and cathode ray tubes from the increased Purchase Tax, and the third asks him, if he cannot do that, at any rate to relieve replacement valves and cathode ray tubes from increased Purchase Tax.
I think that, according to the custom of the Committee. I should declare an interest in the subject. I have always been associated with the trade, and I still am. I did hope that we should get some support—and perhaps we will—from the Government side of the Committee on these Amendments. It was, I think, the hon. Member for Itchen (Mr. Morley) who said earlier that, if the state of the parties in the Committee had not been so close. a number of hon. Gentlemen opposite would have put down Amendments. I hope similar sentiments will abide as far as these Amendments are concerned, and even if the lash of the Whips has scoured the names of some of the Government supporters from these Amendments that they will perhaps help us vocally in supporting the idea.
1.45 a.m.
The reasons given in the Budget speech for the increase in Purchase Tax in this field were threefold. They were first on the score of defence. It was said that it was necessary to discourage home sales in order to get the necessary defence equipment. The second reason was on the score of exports, and the third on the score of revenue. I should like first to deal with the question of defence. This year the Government are going to absorb only approximately 30 per cent. of the output of the radio industry. It is true that Government orders exist, but they exist for small numbers of high quality goods.
In the mass-production field, which is the field in which radio and television are made, the orders are very small. We have practically no orders for the expendable units. In fact, this year only 7½ per cent. of the mass-production side of the in-


dustry will be absorbed by Government orders. Therefore, there is a grave danger that if the deflation which the Chancellor says is the object of his Budget takes place and throttles back demand we shall have unemployment and shall lose the trained labour force of women which will be badly needed when the large defence orders come along.
In the valve industry the position is even worse. We have heard a great deal about orders, and yet this year the Government will take only 5 per cent. of the output of the valve industry, and in the cathode ray tube industry they will take only 1 per cent. It cannot be on the score of defence that this Purchase Tax has been raised at this stage. In the last war the valve industry was required to expand its output enormously until it was producing 45 million valves in a year. Even with the extended field of police radio, V.H.F., television and many other spheres, we are still not absorbing full productive capacity of the valve industry.
Therefore, if the trained force of women is expended and tempted away to other re-armament industries we may be in a position never to meet the needs of defence when these bulk needs arise. During the last war this industry expanded its output fourfold, and it will do so again. It is not prepared to see a trained labour force slowly melt away like the snow in Summer. It is too early at this stage to say definitely whether home sales in television have been affected by the increased Purchase Tax, but if these sales are reduced there is no doubt that we are going to lose a labour force which will be needed later.
It may be thought by the Committee that I have a vested interest in this matter, and I have already declared my interest. May I quote Sir Archibald Rowlands, Permanent Secretary at the Ministry of Supply, who in giving evidence to the Select Committee on Estimates on this matter, said:
We do not want really to close down any of their present level of capacity, because when we shall want an increasing percentage of their capacity they will have lost their labour … In two years time they will have to reduce the number of television sets they can sell in order to provide for the rearmament programme.
The argument is that in two years time they may have to reduce the number of television sets; therefore, I ask the

Economic Secretary why this tax has been applied at this stage.
Having dealt with his first argument on defence, I should like to cover two points on the export argument. The radio industry has expanded its exports from £2 million worth in 1939 to over £20 million a year today, so that it has at least pulled its weight if it has not done even better than the majority of industry in a tenfold expansion of exports. But today it is not difficult to sell goods anywhere.
In a time of inflation almost everywhere in the world one only has to make goods to sell them. But there is a feeling that when the inflationary tide recedes our goods must be left as high on the beach as possible, because at that time it may be very difficult to compete in the markets of the world. When that inflationary tide recedes our prices must be low and highly competitive and, what is perhaps even more important, the quality of our goods must be equal to that of any other goods in the world.
It is on this last score that I cannot help feeling the Chancellor and successive Chancellors have dealt the industry some very uncomfortable blows in the stomach. We have heard of various products on which the Purchase Tax has been put up and then put down, and certainly the record in this particular trade is a most unhappy one. At the end of the war we were allowed to make utility sets. In October, 1947, the Purchase Tax was increased from 33 per cent. to 50 per cent. In April, 1948, it was increased from 50 per cent. to 66⅔ per cent. In June, 1948, it was reduced from 66⅔ per cent. back to 33⅓ per cent. and in April, 1951, it was increased again from 33⅓ per cent. to 66⅔ per cent. I am sure any Chancellor would agree it is very difficult to keep a smooth production flow, which is essential to competitive prices, if one has an industry taxed, untaxed and then re-taxed in a short period of time.
Another point in connection with exports, which has been mentioned several times in this Committee tonight in all sorts of spheres from tweed to insoles, is that one must retain one's home market if one is to keep a healthy export market; and one must retain the quality of products at home if one is to retain


that quality for export purposes. In this country with a tax of 66⅔ per cent., one is bound to produce television sets which are small and cheap. Television is not used by the rich people in this country. A B.B.C. analysis has shown that by and large it is used by the small people. Seventy-five per cent, of the sets are sold to people with incomes of less than £650 a year. It is to those people we have to offer the incentive of a television set, and it is those people who will not pay a tax of 66⅔ per cent. on top of the normal production cost of the equipment.
In the last few months we have started getting inquiries again from the Dominions, South America and all over the world, and the demand is not for the small cheap set but for the big tube set which gives a 16 inch or 19 inch picture. I ask the Economic Secretary to the Treasury, even if he cannot give way on complete sets, to look at the taxation on cathode ray tubes. The 16 inch tube costing £16 cost with the former Purchase Tax £20. At the increased Purchase Tax now operating it costs £24. It is really a little unnecessary to tax a new and progressive industry with a tax of this sort which will put it completely out of business and so place it that it will never regain its foothold in the markets of the world.
I think on the score of defence, on the score of maintaining the quality of our exports, and on the score of maintaining trade and employment for the work-people of this country the Chancellor has imposed this taxation not only unjustly but exactly at the wrong moment, and he is in danger of losing a trained labour force of which he would be in sore need if the time for mass production for war arrived.

Mr. McAdden: I am delighted to have an opportunity of supporting this Amendment which deals with a matter of great importance. During the discussions we have had so far, mostly upon new Clauses moved from this side of the Committee, great stress has been laid by the Government on the fact that responsibility rests with us to prove our cases. However, when the Government suggest an alteration in Purchase Tax on radio and television from 33⅓ per cent. to 66⅔ per cent.

responsibility rests no less on them to prove their case for stepping up the tax.
The Chancellor of the Exchequer, when he first mentioned this increase in his Budget, gave more than one reason for its introduction. [Interruption.] I am delighted to hear the observations of the hon. Gentleman who has arrived at so late an hour. Probably that accounts for the confused and muddled way in which he expresses himself. The Chancellor gave it as his view that not only was it necessary to increase the tax for the sordid purpose of extracting more money out of the pockets of those who purchased radio and television, but also to see that the production of the radio industry was diverted more and more to the needs of re-armament and the export trade.
In former times, in those days of alleged hit and miss forms of business, it might have been forgiven if taxes were introduced on those lines, but in these days of a planned economy I should have thought that it was possible for the Government, if they have a case here, to be able to produce the evidence to convince the Committee. Otherwise, we are entitled to hold the view that their proposals are not sound.
From the census of production figures available to the Government they should know, or at any rate have a shrewd idea, of the total productive capacity of the industry. If the figures are worthwhile. and if they are not it is a pity so much trouble has been taken to collect them, they must have a shrewd idea of the capacity of the industry. Having established that, they have a very sure estimate of the increased tax yield with which to form some idea of what proportion of the total production of the radio industry will in their opinion be available to the home trade in 1951–52.
It is also perfectly clear that the Government, if anyone knows, should know the proportion of the production of the industry which will be absorbed by production for re-armament during 1951–52. They should give us information on the amount of capacity of the industry which is going to be taken up by the home trade, based on the estimated increase yield of tax and the known productive capacity which is going to be taken up by rearmament based on their knowledge of the orders placed so far. Having added those two percentages together, will the


Economic Secretary tell us what percentage is left which he optimistically imagines is going to be absorbed into the the export trade? It is important that before we come to a conclusion on this matter the hon. Gentleman should tell us the facts. If he is not able to do so, the whole census of production is not worth the paper it is printed on, and our time is being wasted.
2.0 a.m.
The modern method of production is not to take a radio set and build a tank round it, but to build the tank first and then install the radio. It seems reasonable to assume that the demands on the radio industry will come rather later than the demands for the other forms of equipment in which radio is to be fitted. If a large part of the industry is to be taken up with the re-armament programmed, one is entitled to assume that the aero planes, tanks, vehicles and other things into which products of the radio industry are to be fitted will be coming forward in numbers greater than the evidence so far available would lead us to expect.
The Economic Secretary must produce that evidence, otherwise he has no right to ask the Committee to support this increase of Purchase Tax which will affect a thriving and useful industry, providing employment for many thousands of people, in many cases in areas where work was needed and where unskilled labors was available. If he cannot produce it, we are entitled to assume that this increase in the price at which sets will have to be sold will affect the demand for the products of the industry, will have a consequential effect on employment in the industry, and will thus mean that when the full-scale demands of rearmament are made labor which would have been available will have gone elsewhere. At a later stage it may be necessary to step up this tax, for one reason or the other, but on the evidence so far no case has been made by the Chancellor.

Mr. J. Edwards: The hon. Gentleman began his speech by reaching a conclusion. Later on, he asked that information should be given on the basis of which he could reach a conclusion. He cannot have it both ways, and he ought not to prejudge the issue if he really wants the facts.

Mr. McAdden: The information in my possession lends colors to the belief that this proposal is not justified. I was hoping to get some information to prove I was wrong. I am still waiting.

Mr. Edwards: There must be a reduction in the home consumption of the products of the radio industry if the industry is to bear the growing load of defense work and also make a higher contribution, as I hope, to exports. I am quite sure that the industry cannot take on defense orders and expand exports and at the same time have home demand or home consumption running at current levels.
I should point out to the Committee that so far the Ministry of Supply has placed orders on the radio industry for about £50 million worth of products. I know that that is subject to qualification in the sense that the orders will run for more than one year and I know that there will be sub-contracting; but it is worth while noting in passing that the 1950 estimate of the total output of the industry was £80 million worth, and that orders have been already placed for £50 million worth of products. I know that that will spread over some years nevertheless, I think the figures are useful for purposes of comparison.
I would say to the hon. Gentleman, when he taunts us with not being planners. that he really should ask himself, and ask himself seriously, what he wants. What we are trying to do here is to use the tax machine. Would he prefer us to go in for limitation of supply orders? We may have to in the end, but we would do without them if we could. It would be possible to go in for limitation of supply orders in this field, but we hope that the damping off of demand because of the increased taxation will, at any rate for the time being, meet the situation.
The hon. Member for Hendon, North (Mr. C. I. Orr-Ewing), who moved the Amendment, said that he disposed of the defense argument. I suggest that he has not disposed of it. He was afraid that the industry would run into a kind of depression in which it would lose its labor. Time alone can show, but I think it extremely unlikely that with the rising demand of the defense programmed on this very important industry we shall reach no


position like that; but if there were any signs that that was the position, that we were getting unemployment, then it would be, of course, our duty to arrest that tendency without any delay.
He also referred to exports. It is interesting to note what the exports have been. He suggested that in order to have exports we must have a good home market. Last year, the purchases at home of radio sets amounted to £ 18,500,000 worth; exports were worth £3,500,000; so I think that it can be agreed that there is a pretty firm home basis there. In the case of television sets, the home amount was £17,750,000; exports were quite negligible, and the figure for them so small it has not been put in. In general, I really feel that there is no likelihood that the industry will be in difficulty in developing export markets because it has not a firm home basis.

Mr. C. I. Orr-Ewing: How shall we produce the bigger and better sets required in the South American market, for instance—from which we have had inquiries only this week—and in Australia. when the enormous tax here makes us produce cheap, small sets, because people cannot afford to pay between £100 and £200, which would be the price of the bigger sets when tax of 66⅔ per cent. is added to other costs?

Mr. Edwards: We cannot possibly, in order to deal with what, as far as I know, is a mere prospect, relieve all the people who buy television sets of tax. That is really not possible.

Mr. Orr-Ewing: That is not what we are asking. It could be 33⅓ per cent.

Mr. Edwards: It is a measure of relief from tax, anyhow, that is asked for. I would point out, since inquiry was made earlier, that although the purpose of this tax is not fiscal, cancellation of this tax would cost £8,000,000 in a full year. That, of course, is a consideration.
The hon. Gentleman referred to the position of valves. I do not like to strike a discordant note, but it is my duty to do so. So far as I am aware, and so far as the Central Price Regulation Committee are aware, the high cost to the public of replacement valves is not due to tax but is primarily due to the price maintenance policy of the principal manu-

facturers. If, as I understand, they sell valves at a loss to set makers and recoup themselves handsomely by charging much higher prices for sales for replacement purposes, the remedy would appear to be substantially in their own hands. But that is a relatively minor point.
The important point is that the overriding consideration in the valve field, as in the rest of the radio industry, is the vital necessity to meet defense needs and increase exports. We must curb the pressure of home demand. I suggest that they have to look at it from one angle only, from the point of view of the nation's needs at the present time. I am absolutely certain this is the right way to try to relieve the pressure of the civilian home demand. With increasing demands from defense and exports, the radio industry will not be able to sustain its production for all these fields.

Mr. Orr-Ewing: I cannot follow the hon. Gentleman's argument. Only 1 per cent. of the cathode ray tube production is taken for defense purposes, therefore the hon. Gentleman cannot say that he has to reduce home demand to make some available for the armament industry. Is it really fair to tax a person who bought a television set two or three years ago another £4 or £5 when he has to replace his cathode ray tube. When he bought his set there was no suggestion that he would have to pay for the rising cost of materials and this extra tax.

Mr. Edwards: I shall not argue on the technical details—it would obviously be stupid for me to do so. But we must not assume that the distribution of resources within the industry is static. I have no doubt that the demands of the defense programmed are going to mean movement from one type of production to another. It may well be that the effect of this tax will be to accelerate this movement, and if it is what the defense programmed requires, so much the better.

Mr. Hamilton Kerr: I should like to support the plea advanced by my hon. Friend. Washington claimed never to have told a lie, but I cannot maintain so high a standard. I must confess that my constituency would benefit if this Amendment were accepted, as Members who have equipped themselves with a Pie radio set will know.
In the past few years the radio industry has conducted effective research with a view to the export drive. I believe the manufacturers are now ready for this export drive, but this tax will harm it and we shall lose our advantage against competitors, notably the Americans. The industry will be largely involved in the armament programmer. That will be effective in a year or 18 months from now. In the meantime, I am afraid that the skilled labor so requisite for the radio industry will be dispersed, if over-heavy taxation wrecks the industry.

Colonel Stoddart-Scott: In discussing an earlier Amendment, the Financial Secretary said that we could not have geographical taxation. But this is a geographical tax, because in the South of England and the Midlands we already have television stations and sets. But in your division, Major Milner, and I know you are not able to speak for your constituents in debates in the House, in Big house, Cleckheaton and Liver sedge in the division represented by the Economic Secretary and in my division, where we are to have television for the first time, we are to be called on to pay double when we buy our television sets. Therefore, I would like to support my hon. Friend in opposing this tax.

2.15 a.m.

Mr. Sutcliffe: I should like to reinforce the argument put forward by my hon. Friends. The reply of the Economic Secretary on this proposal in the Budget will give great disappointment to those in the north of England, especially those who live in Lancashire and Yorkshire.

Mrs. Mann: May I point out that there is no hon. Gentleman opposite to speak about how Scotland is affected?

Mr. Sutcliffe: That may be so, but Scotland is not so near to obtaining television—[Hon. Members:? Yes!?]—as is the North of England. The Holmen Moss station is nearly completed and about to operate. There has been so much delay in completing this northern transmitter—it is three years since it was first shown at the British Industries Fair—whereas in the south, people have been able to purchase television sets since 1946 at the lower rate of Purchase Tax, while

those in the Midlands have been able to do so only for the last 18 months. It is causing great disappointment, and it will continue to do so, because everyone had come to look forward to the great advantage of television and many have ordered sets. It really is a great blow to people in these large industrial areas, because television is no longer a luxury.
It has been suggested to me that a system might be devised by which this northern part of the country could obtain television sets on something like the same terms as the rest of the country were able to obtain them. It would be an advantage if we could allow residents in the new service area covered by the Holme Moss station—an area which is very clearly defined by the B.B.C.—to buy their television sets at the old rates on signing a covenant that they would not sell outside the covenant area for, say, three years. I think that is a sensible suggestion, though I see there might be difficulties in its operation. If something on these lines could be devised and retailers made responsible for operating the plan, I think it would be of great help, and I ask the Treasury to give every consideration to it.

Amendment negative.

Mr. Redmayne: I beg to move, in page 47, line 4, at the end, to insert:
(g) fishing bags, golf bags, cartridge bags, tennis racket holdalls, and similar receptacles of a kind used for sport … … … First.
I must declare some small interest in this Amendment, which is designed to change from 66⅔ per. cent, to 33⅓ per cent. the tax on these bags which are part of the equipment for sport. This Amendment has already been attacked by the hon. Lady the Member for Blackburn, East (Mrs. Castle), who I am sorry to see is not in her place; but it arises logically from the Chancellor's Amendment to exempt from Purchase Tax school bags used to carry to school the equipment for mental exercise. This Amendment seeks to exempt bags used for carrying the equipment for physical exercise. It seems to me quite a logical cause to support.
I would hope that the hon. Lady, the Member for Coat bridge and Airdrop (Mrs. Mann), who has already supported me in one Amendment tonight, and persuaded the Financial Secretary by her eloquence,


may be persuaded to do so again. A similar Amendment which has not been called, that relating to fishing tackle—which was also attacked by the hon. Lady the Member for Blackburn, East—is probably the soundest case in the interest of the export trade put to the Chancellor of the Exchequer in connection with Purchase Tax. The hon. Lady, in criticizing these things, ought perhaps to look before she leaps.
I am perfectly certain that the Financial Secretary will say that this Amendment is untimely and that it is not necessary at this moment; but I would suggest that it is never untimely to put right something which is simply an administrative anomaly. All sports equipment is, in fact, taxed under Group 20, and the wording of that group specifies accessories and requisites for sports and games, and used for gymnastics and athletics, including parts thereof and accessories thereto.
It seems to me obvious that it was the intention of the draftsmen that "accessories thereto" should include such things as golf bags and tennis hold alls, and so forth. But, by a ruling—and I think it is by a ruling only—of His Majesty's Customs and Excise, these bags are included in Group 23, which deals with trunks and bags, and wallets and similar receptacles, of a kind used for personal or domestic purposes, whether fitted or not.
That is an extraordinary ruling, because in that ruling are included simple things like golf club head covers, which are not used for any personal or domestic purpose. There are some exceptions for bags of various types which are used for vocational purposes; but in the class with which I am dealing is a great number of bags used for sporting purposes which obviously are purely accessories to sport— fishing bags, golf bags, cricket bags, tennis hold alls, and articles of that sort.
There are anomalies already in the interpretation of these Groups. One particular anomaly relates to gamekeepers' bags and to rabbit bags, which are already taxed at the rate of 33⅓ per cent., not because they are vocational, but I think purely because His Majesty's Customs and Excise have got themselves into a certain difficulty over distinguishing between a game bag used by a gamekeeper vocationally and one used by an amateur, and therefore they could only

put them into Group 20 and not into their proper Group, namely, Group 23.
I shall not labor this point. It is obvious that there is an administrative anomaly. I do not believe that reduction of the tax from a rate of 66⅔ to a rate of 33⅓ per cent. will make any difference to the economy of the country. There is, I believe, a surplus of the type of leather and, to some extent, the accessories which are used for these purposes, and I am certain that this equipment, being equipment necessary to the various sports, will be bought by those who take part in the sports whatever the tax may be; but it is quite obviously unfair that the rates should be at the higher level.
There may be some small loss to the Revenue, although I do not think it can be very much. There is much common sense in this Amendment, although I know that the Financial Secretary will say that it is untimely, and that he cannot give preferential treatment to one article over another; but I beg him to think over this matter before the Report stage, because under the rules of the Committee it has been impossible to raise this point for some years past, and will quite probably prove impossible for some time in the future. Therefore, the hon. Gentleman might just as well deal with it now.

Mr. Jay: The hon. Member who moved the Amendment stated that he knew what I was going to say in advance, and that I must not say it, but despite that. I must tell him that it does not seem that this proposal really fits in with the general class of exemptions and reliefs which we have been able to make this year. The reliefs in Purchase Tax generally relate to household articles which most of us regard as necessities. It is true that we have included school satchels in the reliefs, but it has long been regarded that it was an unjustified anomaly that those bore Purchase Tax whereas receptacles used for any trade, profession or vocation, were exempt.
It seems to me that these fishing and golf bags, and tennis racquet hold alls, and so on, do not really come into the same class as receptacles used for professional or working purposes, or the same class as school satchels. The hon. Gentleman asks what the cost would be; while in this particular group it would, I agree, be small—although it is not easy to estimate


exactly—I would remind the Committee that the total revenue from Purchase Tax on receptacles is as high as £8,250,000. If we accepted a reduction on this particular group, there would at once be a very good reason for it to be sought for others. This is not, therefore, one of the proposals which we can undertake to consider further.

Amendment negatived.

Amendment made: In page 47, leave out lines 5 to 14.—[Mr. Jay.]

Mr. Lindsay: I beg to move, in page 47, line 16, after "(b,) insert:
 after the word 'brushes' there shall be inserted the words 'other than toothbrushes.
The purpose of this Amendment is to remove toot brushes from the incidence of Purchase Tax. The whole structure of Purchase Tax, it is agreed I think, is simply bristling with anomalies, and there is no greater, or more ridiculous anomaly than this. This essential item, which should be in every bedroom or bathroom in the land, is now subject to 33⅓ Purchase Tax. The Chancellor has already recognised that this article, with others, partly in the medical and partly in the toilet field, which are in constant use, should not be subject to Purchase Tax. Therefore, this Finance Bill provides for hot water bottles, urinals, commodes, toilet paper, air pillows, air cushions, waterbeds, and so on to be relieved of Purchase Tax.
2.30 a.m.
I suggest an essential difference between these items and a toothbrush because obviously one does not make frequent use of them unless one is so far gone that one does not care whether one pays Purchase Tax or not. A toothbrush is infinitely more essential and the case for relieving it from Purchase Tax is infinitely stronger. I always thought that it was the duty of parents to bring up their children to clean their teeth in the mornings. Apparently we have reached the stage now where a parent says to his children, "Do not brush your teeth too hard and do not use toothpaste because it costs too much money."
I suggest that today, and in future, because the populace are having to bear half the cost of their dentures, it is more important than ever that they should not

feel inhibited against purchasing new toothbrushes. I understand that the annual consumption of toothbrushes is in the neighbourhood of 15 million and I suggest that even if one allowed for the fact that part of the populace's teeth have not grown and others have fallen out, it still means that the average person in England buys one new toothbrush every two years. This is a very frightening figure and one which should cause us all alarm. I have many extremely good jokes which I have been preparing for the last three weeks, but it is much too late in the morning to make them, and therefore I have moved the Amendment briefly.

Mr. Snow: I was rather surprised on the Second Reading of this Bill that I was, in fact, the only Member of the House to raise this particular issue. I suppose it should give me some comfort that the Opposition have now woken up to this very important matter. I think this Amendment and its companion Amendment, should receive the very serious consideration of the Government.
I want to take this opportunity of correcting what was an error in my Second Reading speech, in that I rather implied that the Purchase Tax in question had been imposed during the lifetime of the last Parliament. I was corrected afterwards privately that it was imposed during the war.
One of my contentions is that the tax in question should never have been imposed and should not have been retained. I did give to the House on the occasion of my previous speech a list of the types of brushes which are, for the purposes of this tax, included with toothbrushes. If I may repeat that list again, it will demonstrate the false equation that has been made. We find that toilet brushes, bath brushes, clothes brushes, eyebrow brushes, hair brushes, hat brushes, nail brushes, shaving brushes, and animal toilet brushes are all equated with toothbrushes. Sir Charles, you and I may have different views about the value of these various sorts of brushes, but I think we would agree that toothbrushes cannot in any sense of the term be considered a luxury.
There is another rather important point. I think there has been an example recently where a tax has been reduced


and where the benefit of that reduction has not been passed On to the public. I am given to understand that it was in 1949 that the price control on tooth brushes was in fact removed, it being thought that competition would do its proper job and keep prices down. I am not prepared to argue that there has been, in fact, a serious degree of profiteering in this commodity, but I did take steps to find out what was the history, so far as profits and dividends were concerned, of the three leading manufacturers of tooth brushes in this country. I found one of them was manufactured by a very large limited liability company, whose activities were so varied that you would not ascertain what profits they were making on tooth brushes.
The other two were private companies, and one of them, whom I approached for figures through a reputable agency, frankly refused to give me any information at all. [Interruption.] I heard hon. Gentleman opposite saying, "hear, hear." It seems rather a pity that when we are considering a reduction in tax with a view to assisting the consumer, they should applaud the business principle that we should not be given information to judge the issue properly.
Therefore, I do say to my hon. Friend that if in fact he can be convinced about the legitimacy of the argument, he should consider taking up with the trade the question of disclosing information that would enable us to judge whether or not a reduction of tax is going to be passed on properly, or he should consider the reimposition of Purchase Tax through a Statutory Instrument.
One other point I want to make is that I think it could be fairly argued that the present high cost of tooth brushes does result in a reduction in purchasing of this commodity. I took the precaution of consulting what is, I suppose, the greatest authority on dental hygiene in the country—namely, the Eastman Dental Clinic at Gray's Inn Road. If I may say so in parenthesis, it is worth the time of any hon. Member to go and see that clinic. I am authorised by the director to say that he would welcome any hon. Member there. I am advised by them that it is by no means uncommon for a mother of a family, when she is told she should be buying tooth brushes at three- or four-monthly intervals, to say

"But that will mean laying out about 10s. every three or four months, and that is a serious financial consideration."
I think, in essence, one should only argue for the reduction of this tax on these lines: that it is wrong to consider a tooth brush in the same category as other sorts of brush I have described. Therefore, I urge that this particular Amendment should be accepted by the Government.

Mr. Jay: I must confess I was much impressed at the time by the eloquent speech made by the hon. Gentleman for Lichfield and Tamworth (Mr. Snow) on the Second Reading. I took the precaution, after that, of consulting my right hon. Friend the Minister of Health to obtain his view on the matter and I found, as I rather suspected, that he also was in favour of tooth brushes. I have listened tonight to the hon. Member for Solihull (Mr. M. Lindsay), whose speech bristled with wit, some of it apparently unspoken, and my hon.. Friend behind me, whose speech bristled with powerful argument.
The real reason why the Government in recent years have hesitated to exempt tooth brushes is mainly that it was felt to be doubtful whether a distinction could be made between the tooth brush and the other brushes my hon. Friend mentioned—hair brushes and so forth. [HON. MEMBERS: "Oh!"] I gather, however, from the comments from the Committee generally that it is now the view of the Committee that a perfectly firm distinction can be made between the tooth brush on the one hand and these other brushes on the other.
On that understanding, and if that is the view of the Committee, I think a clear case has been made for considering the exemption of tooth brushes from tax. I would only add, for the information of the hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who displayed considerable curiosity about the figures but who has not stayed to hear the answer, that the cost of this exemption, if we were to decide to admit it, would be about £450,000.

Lieut.-Colonel Bromley-Davenport: It seems to be my fate to rise to speak at that point in the proceedings when nobody wants to listen. Some six summers ago in the Chamber


which is now the other place I made a special plea to the then Chancellor of the Exchequer to remove this tax from tooth brushes and tooth paste, and I hope the Committee will forgive me if I briefly repeat the gravamen of my pleadings on that occasion.
Surely social democracy has advanced sufficiently for tooth brushes to be regarded as a national necessity rather than as a luxury for the idle rich. The standard of the people's teeth has not been very high, and it was in order to try and remedy that defect that this Government, carrying out the policy of the Coalition Government, has embarked on this vast scheme of national expenditure to improve the supply and quality of dentists and to improve the health services. But I submit that a great deal of this expenditure could have been saved had the tax been taken off tooth brushes and tooth paste.
Surely it is paradoxical that this Government should spend hundreds of millions of pounds a year in subsidising the food for the people of this country and that they should then tax the brushes with which the people seek to preserve their teeth in order to consume that food. Surely it is more important now than ever it has been before to have stronger and cleaner teeth in order to consume the tough horse-flesh which the housewife has to buy. I think I shall carry the Committee with me when I say that it may well be that the Government envisage an even further lowering of the standard of the foodstuffs for the people of this country, and that therefore they seek to destroy the people's teeth in order to discourage their desire for eating.
Although this Finance Bill is a bad Bill and already has too many teeth in it, let us at least have tooth brushes in the Schedule. My final point is this. Surely it is ridiculous that the brushes with which the women of this country laboriously scrub their doorsteps should be free from tax while in some cases their unscrubbed teeth may be decaying because of the tax on tooth brushes.

Amendment negatived.

Mr. Geoffrey Lloyd: I beg to move, in page 47, line 20, to leave out paragraph 11.

The Deputy-Chairman: Perhaps it would be convenient if we dealt at the same time with the following Amendments: In page 47, line 25, after "vehicles," insert:
other than a vehicle without the use of which it can be shown by medical evidence that a person cannot conduct his means of livelihood, which shall be charged at the first rate";
in page 47, line 26, at the end, insert:
(b) After paragraph (a) there shall be inserted the following paragraph:—
(b) road vehicles, to which paragraph (a) of this group would apply but for the following reasons,
(i) the chassis of each such vehicle was purchased by a person (in this paragraph called? the purchaser') on a date before the eleventh day of April, nineteen hundred and fifty-one, and
(ii) additional superstructure is added on or after the eleventh day of April, nineteen hundred and fifty-one, on behalf of the purchaser by a person or persons not being the manufacturers of the chassis … … … First.";
in page 47, line 26, at the end, add:
(b) After paragraph (a) there shall be inserted the following paragraph:—
(b) road vehicles to which paragraph (a) of this group would apply but for the following reason, namely that they were purchased outside the United Kingdom by members of His Majesty's armed forces or departments of state while serving in the normal course of their duties, on a date preceding the eleventh day of April, nineteen hundred and fifty-one … … First.";
and in page 47, line 37, at the end, add:
Provided that mechanically-propelled vehicles and mechanically-propelled tricycles, being road vehicles, when purchased by persons who have not been supplied with a vehicle by the Ministry of Pensions and the nature of whose disability makes such transport indispensable, shall be charged at the first rate.

2.45 a.m.

Mr. Lloyd: The Financial Secretary when he was defending the Petrol Duty gave as one of its great virtues that it was spread widely and evenly over the whole population. I think we could agree with that, but he cannot bring forward that defence with regard to this tax, which I think I can say is concentrated fiercely on a relatively small number, that is, 80,000 people.
Perhaps I can sum up the case I want to make by saying that both the Chancel-


lor and the Financial Secretary when they were dealing with the duty on petrol asked us to consider the conditions abroad with regard to the price of petrol. I might ask the Chancellor to glance for a moment at conditions with regard to the Purchase Tax on motorcars in those countries.
I understand the tax in Canada is about 30 to 35 per cent. But the number of cars absorbed into the home market in Canada in a year is 340,000. It will be seen, therefore, that the revenue from the tax in Canada, although broadly speaking it is at the old rate we had in this country and half the rate which the Chancellor proposes today, will yield revenue twice as great as the Chancellor will get from his increased tax. I would add, in passing, that the allocation per head in Canada is 16 times greater than in the mother Country at the present time, which is a rather startling fact.
Taking another country in a completely different situation, Germany, which is not a Dominion nor an ally, and where the population is a few millions less, the purchase or sales tax is 3 per cent., and the allocation of cars last year was 165,000. On a 3 per cent. basis one would hardly expect to get the revenue the Chancellor is expecting, but if there were an allocation of cars in this country equal to what the Germans are getting at the present time the Chancellor would be able to obtain the revenue he is expecting to get this year from double Purchase Tax by keeping the tax at the same level as it was before.
I do not want to carry that argument too far and I am not carrying this comparison quite as far as the Chancellor did over petrol. I do not think it is conclusive, but I think it is food for thought. The thought I want to put in the Chancellor's mind is that this tax is unique in that by his right hand he fixes the rate and by his left hand he fixes the number of articles on which tax is to fall, and in a sense he is doubly responsible for the revenue here. Is he satisfied that in striking the balance of the rate and number, which is at present 80,000, he has struck exactly the right balance with regard to cars allocated to the home market?
I am sure he will not think I am suggesting we have to override the needs of defence and of exports, but it is not just a

question of black and white otherwise he would not have even an allocation of 80,000. I noticed that conditions are changed. There is, for example, the increased allocation of sheet steel announced today for the motor industry which might permit a larger production, and there is the Margam mill which is coming on later. If that larger production were forthcoming, would it be possible to tax it at a lower rate which would produce a similar revenue?
There is also the question whether the old car population we have at the moment is not making an extravagant demand on production and manpower in the making of spare parts. Would it not be better to use that production and manpower more for the building of new cars so that the Chancellor would have an extra proportion of Purchase Tax? If, for example, he were only able to revert to the quota of 110,000 as it was before February of this year, he would be getting, even if he kept the old rate of tax, nearly half way towards the extra revenue he is getting this year from his new and double tax.
When he is striking this balance, and perhaps listening to the case I am making, would the Chancellor also bear in mind the disadvantageous effect of double Purchase Tax on the second-hand price of cars? Before the war, and before the imposition of Purchase Tax, a 10 h.p. four-year old car could be bought for about £45. At the present time a 10 h.p. four-year old car costs about £690. That is a very severe disadvantage for those to whom we are looking to become motorcar owners, and I would conclude by asking the hon. Gentleman to consider the argument.

Sir W. Wakefield: The Chancellor of the Exchequer, the Financial Secretary, and the Economic Secretary have all at various times pointed out that the purpose of the Purchase Tax is to raise revenue. The Financial Secretary said earlier this evening that he did not have much money to play with, but that he would listen carefully to the representations which were being made to him.
The Chancellor will be glad to know that the proposals I am going to make will give him extra revenue, and this should help him to consider sympathetically some of the proposals put forward


by my hon. Friends. The way in which extra revenue is going to be raised, if my proposals are adopted, is for the Chancellor to reduce the Purchase Tax on taxicabs. I have evidence which shows he has already lost, and will continue to lose, a great deal of revenue. I have a letter from one of the distributive agents of the manufacturers which states:
Since the Budget was announced on the 10th April we have delivered only 30 new cabs subjected to the double Purchase Tax, which has brought in to the Exchequer a matter of £13,000. We have been delivering up to the time of the Budget an average of 90 cabs a month, or for the seven weeks intervening to date since the Budget, some 150, in spite of which we have delivered only 30. The single tax on these 150 would have amounted to £32,500.

The Deputy-Chairman: I think the Amendment relating to taxicabs was one I was not proposing to call.

Sir W. Wakefield: The point I am making, I submit, is included in the matter of Purchase Tax on vehicles which we are discussing. I am showing to the Chancellor that I have evidence that he is losing revenue, and if he reduces the tax he will get more money than he does now. I trust I am in order in doing that.
The single tax on these 150 taxicabs is worth £32,500 to the Exchequer so that the extra tax has already lost the Treasury £20,000. When the increased tax was announced, the immediate effect on this agent's sales was extremely drastic. Not only did the large proprietors hold up delivery, but the small owner-drivers held up or cancelled their orders to the extent of 85 per cent. I have also information from the London Taxicab Proprietors' Association that over 90 per cent. of orders placed with manufacturers have been cancelled.

Mr. Edelman: Are the reasons the hon. Member is advancing for the cancellation of orders supplementary to the fact that certain large manufacturers of taxicabs in Coventry have recently provoked a strike?

Sir W. Wakefield: I know nothing about strikes in Coventry. All I know is that this double tax is so severe that orders have been cancelled as a result. I am indebted to the hon. and gallant Member for Morecambe and Lonsdale (Sir I. Fraser) for the information that the British Legion, with which he is closely con-

nected, runs a taxi school for ex-Service men, and that these men are deeply concerned about their prospects of ever being able to purchase a cab and run it themselves. What people do not understand is why these taxicabs, operating in London, Liverpool and Glasgow and specially constructed according to police requirements, should not be exempt from Purchase Tax in the same way as a variety of other vehicles, including omnibuses, coaches, travelling shops, canteens and horse boxes. There seems to me no reason whatever why this exemption should not be given. Greater revenue would be obtained by so doing.
The Chancellor was asked by the London Taxicab Proprietors' Association last April to receive a deputation. He replied that he would not do so because all the salient facts were before him when preparing his Budget proposals and he had decided that the increase in Purchase Tax and the duties on hydrocarbon oils were necessary to produce the extra revenue for defence. So far from producing extra revenue in this case, he is in fact losing substantial revenue. I hope he will reconsider the matter. Unless he does so, London is going to be left without taxis. According to police requirements, 1,524 cabs have to go off the streets this year and 1,103 next year. As over 90 per cent. of orders have been cancelled, there will be no replacements. The cost is quite prohibitive. The hire purchase cost is now £1,493, as against £471 before the war. The cash price is £1,210, of which £433 is Purchase Tax as against a pre-war price of £355.
For all these reasons I suggest that the Chancellor of the Exchequer reconsider his decision. If he will, I think, he gets what he wants, that is, obtain more instead of less revenue.

3.0 a.m.

Mr. Lionel Heald: I am going to assume that the Committee has the same knowledge of this rather complicated matter of my Amendment in line 26 as, I am sure, the Economic Secretary has, and that I may put it quite shortly this way. The effect of the provision as it stands in the Bill at the moment is that if someone has purchased a chassis of a motor vehicle, paid for it and paid Purchase Tax on it, and subsequently has a body put upon it, he not only pays the increased tax on


the body but the increased tax on the chassis which is already his property. That is, of course, an obvious anomaly of a serious character.
I quite appreciate the difficulties of making our Amendment. I want to say at once to the Economic Secretary—and I think he will be sympathetic to this being done—that the Amendment goes further than, I think, it should go, because as it is drawn it would exempt from the increase of tax not only the chassis—which is clearly right—but also the body, which, I think, is clearly wrong. I want to admit that the Amendment goes too far, but I should like the hon. Gentleman to consider the matter; and if he comes to the conclusion that it is possible to draft an Amendment in such a way as to give the relief that I think is justified, without going to an unjustifiable extent, then I should very much like to have an opportunity of discussing the matter with him before the Report stage, to see whether we can arrive at some conclusion.
It does seem to me to be a most remarkable thing that a man who has a separable and separate article in his possession, which he has paid for and paid Purchase Tax upon, should retrospectively be compelled to pay more Purchase Tax on it. That does seem to be a wrong thing. After all, although last year we had a most interesting discussion of what a chassisless vehicle was, there is not much doubt about what is a chassis. A chassis is a thing on which one can place a box and sit upon, and which one can drive away. Everybody knows what it is, and everybody knows it is one's property. I suggest that it should not be beyond the wit of man, and surely not beyond the wit of the Treasury, whose wit is greater than that of the average man, to provide some method by which that injustice can be relieved.

Mr. Wood: At various times during the last fortnight my hon. Friends and I have put arguments before the Chancellor of the Exchequer and the Financial Secretary about various hardships which we believe people are suffering through the policy of this and the last Budget, and I hope that tonight I shall have greater success than I have had so far in finding a way to the kind heart of the Economic Secretary—if, indeed,

he is to answer this case—in asking him if he will consider favourably the Amendment we have down to line 37.
So far we have considered the difficulty of disabled people through the rise in the tax on petrol. The rise in the running costs have been substantial, but that is, to use the word I think the Chancellor of the Exchequer used the other day, a "bagatelle" compared with the terrible difficulties that are facing disabled would-be buyers of new cars. I believe I am right in saying there are 2,000 vehicles which the Government have allowed to badly disabled ex-Service men and I suppose there is a rather larger number of mechanically-propelled vehicles of a smaller kind which are also allowed.
This Amendment claims nothing for these two categories. The people it claims to relieve are those who have tried to save up some money to buy a vehicle for themselves. Rightly or wrongly, it is the policy of the Government to allow no priority merely because of disability, and a great many people who have saved up and waited for some years to buy a car are extremely hard hit because the tax has gone up. The Economic Secretary may boggle at the words,
the nature of whose disability makes such transport indispensable.
I do not think my hon. Friends would be tied to that form of words. The Government recognise that certain categories need transport and they are provided with transport by the Ministry of Pensions.
I should like to ask whether persons in the category who have not been provided with vehicles by the Government could be eligible for this relief from the higher rate of Purchase Tax. Frankly, I have no idea of how many disabled ex-Service men who need this kind of transport will wish to buy motorcars in the next 12 months. I should be extremely surprised if it were more than a few hundreds. I have already heard of one case in which the person had to cancel an order for a car because of the increased tax. I wish the Economic Secretary to consider seriously whether this kind of thing can be prevented.
In conclusion, I should like to put these considerations before the hon. Gentleman. The increase in cost to the


individual who is saving up for a car is enormous, while, if this Amendment were accepted, the loss of revenue would be negligible. The administrative difficulties of allowing a certain category of people to buy cars at the lower rate would not seem to be insuperable. Lastly, to forestall what has become a popular argument in resisting these Amendments, the granting of this concession to those who are unable to travel without it would seem to land the Treasury in no difficulty whatsoever. I hope the Economic Secretary will give favourable consideration to this Amendment.

Mr. Boyd-Carpenter: The Amendment in my name and the names of my hon. Friends the Members for Monmouth (Mr. P. Thorneycroft) and Hampstead (Mr. Brooke), in line 20, is designed to deal with a difficulty which has arisen affecting members of the Forces serving abroad. Such persons who purchase a car from this country obtain it in the first place without payment of Purchase Tax, but when they come back to this country and bring their car with them, they have to pay Purchase Tax.
As a result of the increase in Purchase Tax under this Schedule, a number of such people have been caught most unfortunately; that is to say, having obtained delivery of a car last year when serving abroad, if they return to this country they find that, instead of paying the rate of tax applicable to the date of purchase, they had to pay at the present rate. The matter was drawn to my attention by a constituent of mine, serving in the Royal Navy at Malta, and two paragraphs in his letter are relevant.
In the past serving officers and men have been permitted to import British motorcars into the United Kingdom at the purchase tax which would have been charged if the car had been delivered to them in the United Kingdom—instead of abroad. To support this one had to produce a certificate from the manufacturers saying what that purchase tax would have been.
Now, I am reliably informed, the purchase tax being charged on cars entering the United Kingdom is double this tax, i.e. at 66⅔ per cent. instead of 33⅓ per cent. This despite the fact that the cars were purchased 12 months or more before April of this year.
In my particular case the car (a Morris Minor) was purchased in Malta and full Malta import duty paid in April, 1950. I shall be bringing the car back to the United Kingdom

in June and it would appear that the total cost to me will be very nearly £600, of which £167 will be purchase tax and something of the order of £60 or £70 Malta duty.
It seems unfair that a man who has purchased a car abroad should find subsequent to that purchase that when he returns to the United Kingdom he has to pay a different rate of Purchase Tax from that which he would have had to pay if he had lived in the United Kingdom at the time he bought the car. The Amendment is designed to deal with the men serving in the Forces abroad, and the reason my hon. Friends and I have made that distinction is that other people abroad are free to control their own movements, but the serving man has to move where he is instructed, and the timing of his movements is outside his control. If the Purchase Tax provisions remain as they are at the moment, these people may be involved in an appreciable financial loss.
I have been in touch with the Financial Secretary, and the last paragraph of his letter is material. He mentioned the name of my constituent, which I will not quote to the Committee. The letter states:
So and So is unfortunate in getting caught by the higher tax; but I should imagine that there are a great many persons in this country who have been waiting a long time for a car, and would be only too glad to have a similar car at the same amount as it will have cost him when he brings it here.
I hope that is not the attitude which the Government are going to adopt. It really does seem—and I hope I am not using too strong language—a shabby way to treat members of His Majesty's Forces serving abroad, and I hope that the Treasury will, on consideration, appreciate that there is here a real grievance which could be put right at an obviously trifling cost. I do not know whether the Economic Secretary can give the exact figure, but it is trifling.
As to administration, there is no difficulty in the case of a car, which is an easily identifiable article with a chassis number, etc. If the manufacturer could give a certificate of date of sale and delivery, a reduction in the Purchase Tax could be obtained only when the certificate was produced to satisfy the Customs that the car came within the concession. It seems that there is no other practical difficulty in doing it. If there is no other practical difficulty and the cost is trifling,


I can see no reason why members of His Majesty's Forces serving abroad should not get relief from this unfortunate and accidental consequence of increased Purchase Tax.

Mr. Macdonald: In rising to speak to my Amendment in line 25, it is so much in line with that of the hon. Member for Bridlington (Mr. Wood) that there is no need for me to enlarge on it at all. But I add my appeal to the one he made to the Chancellor of the Exchequer that the right hon. Gentleman should give consideration to the small number of people who are suffering hardship by the increase in the tax on motor cars when they find it essential to have a car in order to gain their livelihood.
3.15 a.m.
I have had several letters from young ministers and others crippled with rheumatoid arthritis, and they complain that, having saved sufficient to buy a car carrying the old rate of Purchase Tax, they find it impossible to do so now unless they can get a loan from someone, or otherwise raise the money, to pay the additional amount. I think there will be no chance of any misuse of this privilege, if the Chancellor of the Exchequer will grant it, because the right hon. Gentleman can insist upon the necessary medical certificates to vouch that they need cars. I have great pleasure in supporting the remarks of the hon. Member for Bridlington.

Mr. Henry Brooke: I promise to be brief at this hour of the morning, but I want to support the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), because he has called attention to a genuine, and remarkable, hardship. A constituent of mine was serving in Hong Kong, where he bought a British car and, having calculated the Purchase Tax to be paid on it at the old rate, he proposed to bring it home. He would have had it home before the Budget, but for the fact that the Board of Trade delayed his import licence, so that he was not able to get the car on board ship until March. It arrived in this country on 16th May.
While both he and the car were at sea the news came through, disastrous news for him, about the doubling of the tax. He was informed, when he reached this country a month after the Budget, that he would be required to pay about £500 Purchase Tax instead of the £250 for

which he had bargained. He thought that was unjust, and in any case, he had not the money to pay the extra tax. The only alternative which appeared open to him was to sell the car. It then emerged that, under a rule made by another Government department, namely the Board of Trade, the import licence granted to him precluded his selling the car within two years of importation.
He is therefore in the position of a man—a serving officer—who has done everything in perfect good faith, not expecting a bombshell of this kind, and now finds that he can neither afford to pay the double Purchase Tax to get his car released for his own use, nor is he permitted to sell it. Is the car to be forfeit to the Crown, or is the Government going to see whether, in these cases, some way out can be discovered so that men who have been serving in the Forces abroad can be saved from this exceedingly unpleasant homecoming which the Chancellor of the Exchequer has, I am sure unwittingly, prepared for them?

Mr. J. Edwards: A number of different points has been raised in this discussion and the Committee will, I hope, forgive me if my reply is a little disjointed. May I begin with the Amendments in the names of the hon. Member for Bridlington (Mr. Wood) and the hon. Member for Roxburgh and Selkirk (Mr. Macdonald). I think that we listened sympathetically to their speeches, but I must say to the Committee, as the Chancellor of the Exchequer did on a similar topic earlier this week, that we and previous Governments have given great attention to this matter to see whether some further relief can be given for disabled persons who need their own road transport.
I have to tell the Committee that there has not been found any method which is really practicable and which can be administered. Although the case does raise sympathetic issues, we cannot accept either of these proposals because we should, thereby, adopt something which is administratively unworkable. It is a fact of which one has to take account, and no Government ought to agree to something which in practice it cannot carry out. With great respect to both hon. Members, I am sorry to have to say that we cannot proceed as they suggest.
So far as the hon. and learned Member for Chertsey (Mr. Heald) is concerned, I


cannot give much hope for his view. After all, the number of cases to which he has referred must be very small, because the overwhelming majority must get their cars from the manufacturers, or from a person specialising in body building on the chassis; and the cases where a person buys a chassis and then places a contract for the building of the body, must be very few.
I do submit that the chassis by itself is useless until the body has been built on to it, and it does not seem to be a correct use of language to describe the purchase of the chassis as a complete transaction in itself. The hon. and learned Member was good enough to point out the fault in the draft, but I think it would be very difficult to justify a change of this kind. The cases must be very few indeed, and might even include those people seeking to forestall the payment of tax by this means; and, in all the circumstances, I am afraid that we cannot agree.
Turning to the Amendment moved by the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and supported by the hon. Member for Hampstead (Mr. H. Brooke), I say at once that I see the point of what both have said; but that point does raise a very great difficulty as a matter of principle. So far we have kept the invariable rule that importers must pay their tax or duty at the rate in force at the time of the importation and this rule we think is essential so that imported goods coming on to the home market bear the same tax as those goods being produced in this country. If we did not do this, the taxation would not be in proper balance. Generally speaking, it would be quite impossible to have import duties for the great majority of goods depending on the date of purchase.
A further difficulty, quite frankly, is that if we are to do this one way—that is to say, when Purchase Tax goes up, we amend the law—then we must do it the other way; and in respect of motor cars for these particular classes of people, the Purchase Tax must be the Purchase Tax in operation at the time of purchase.

Mr. Boyd-Carpenter: My case was not that at all, but that it should be no higher than at the time of purchase.

Mr. Edwards: Yes, but that, if I may say so, is absurd, for the hon. Gentleman wants it just one way. It would be impossible for anybody representing the Treasury to say, "Very well, whenever the tax is going the one way, you shall have the benefit, and if it is going the other way you shall also have the benefit." While I have a good deal of sympathy with the cases brought to our notice, these difficulties of principle are real. I am, however, prepared to consider it from the point of view of the individual difficulties that have arisen, but I forsee very great difficulty in dealing with the matter so that it would not raise a whole crop of anomalies and cause any Treasury spokesman great embarrassment in the future.
I come finally to the Amendment that has been moved by the—

An Hon. Member: What about taxicabs?

Mr. Edwards: The hon. Gentleman says taxicabs, but I understood. Sir Charles, that the Amendment dealing with taxicabs was not in order.

The Deputy-Chairman: That Amendment is not being called: it is in the wrong form.

Sir W. Wakefield: I did not speak to that Amendment but to the Amendment in the name of my right hon. Friend the Member for King's Norton (Mr. Lloyd).

Mr. Edwards: In reply to the hon. Member for St. Marylebone (Sir W. Wakefield), may I say that the right hon. Member for King's Norton based almost the whole of his case on the idea that the allocation of cars for the home market should be increased. I think that is not exaggerating the case he put—that if only we allowed more cars to go on the home market and kept the tax at the lower level, it would be all right. That argument overlooks a very important point and seems to suggest that the right hon. Gentleman is not aware that we have an export problem still with us. The record of the motor car industry in this matter has been very good, but we know, with the export market as it is at the moment, that we can still sell more cars abroad. It was therefore a deliberate act of policy to reduce the quota for the home market. If the motor car industry produces more cars, it will be the wish of the Government that we should not have more cars on the home market because we have to pay our


way abroad and the contribution of the motor car industry is most important.
If we assume, as assume I must, that we cannot in present circumstances have a bigger allocation of cars on the home market, I think it will be agreed that in present circumstances we just cannot give up the £17 millions in a full year that would be involved if the tax were reduced in the way the Amendment suggests. Unlike most of the other cases I have handled this evening, this is one where the primary purpose is to raise money. I agree that it is bound up with the allocation to the home market, but I cannot concede the major point the right hon. Gentleman is putting. Therefore, not being able to concede that, I have to say that on the facts that £17 million is not a sum which can be given up in present circumstances. For these reasons, I hope the Amendment will be rejected.

Sir W. Wakefield: I made a very clear case to show that the Treasury were losing revenue by having this double Purchase Tax on taxicabs. Why not remove that and get more revenue?

Amendment negatived.

The Deputy-Chairman: Does any other hon. Member wish to divide on his Amendment? I think not.

Motion made, and Question proposed, "That the Schedule, as amended, be the Fifth Schedule to the Bill."

3.30 a.m.

Viscount Hinchingbrooke: I shall not keep the Committee for more than three minutes, but the Chancellor of the Exchequer, in his Budget speech, forecast most of what this Schedule would contain and, in particular, said that household goods in common use would be reduced to the exemption rate. That being the case, I cast my eyes down these two or three paragraphs to see whether they fulfilled that condition, and I noticed one item in paragraph 2 (e), that seems to me to be outside the range altogether, namely, air pillows, air cushions, water beds, water pillows, and water cushions. I should like to know what these are, and whether they are not in fact some kind of luxury article such as egregious persons might purchase for floating down the Thames during Henley week. They seem to me to be a very curious collection indeed. Perhaps a better explanation could be offered.
A little further down the Schedule one sees a number of items which are not even in common use in the home. They are much more particularly related to group homes, old persons' homes or hospitals. I want to know whether, on the advice of the Minister of Health, the Chancellor has put in this Schedule at the last minute certain items peculiar to hospital equipment and what is the reason for so doing, because it would appear that all the items now used in hospitals are not exempt from Purchase Tax. Beds and bedding and linoleum, for example, I gather carry the normal domestic rates even if they are used in hospitals. Surgical trollies are rated at 66⅔ per cent. and there are certain medical appliances that carry Purchase Tax.
If the idea is to free from Purchase Tax altogether what is in common use in hospitals and group homes in the country, that has not been achieved by the Schedule. What has been achieved is a special favour to certain types of industry which produce certain hospital accessories, notably in the sanitary-ware range, and I want to know what is the precise reason for introducing this rather peculiar range of accessories into the Schedule.

Mr. Arthur Lewis: Before the Chancellor replies, I hope he will bear in mind the fact that for the last two hours there have been less than 30 Tories in the whole of the Palace of Westminster and that therefore it is apparent they am not interested in the subject.

The Deputy-Chairman: That is not related to the Schedule.

Mr. Spearman: Before we pass from the Bill, I want to refer very briefly to the position of the retailer under this tax we have been discussing. He has already to bear the burden of an unpaid tax collector and the expense and trouble of it. He also has to bear the brunt of any reductions in Purchase Tax, and I hope that the Chancellor will concern himself to find some means by which this anomaly does not fall on one section of the community alone. He also has to bear the interest on the Purchase Tax.
As I understand it, the manufacturers and wholesalers only pay Purchase Tax


after one month, whereas retailers have to pay Purchase Tax immediately after they buy the goods, although they may have to keep the goods weeks or months or even a year. The burden falls upon them. This has been much accentuated by the rise in prices because of the automatic increase in the Purchase Tax. I therefore ask the Chancellor whether he will see if something can be done about that, particularly in view of the fact that the burden falls upon the small shopkeepers who have not got the resources of the bigger ones, and for that reason for the first time in their lives they have had to have recourse to the banks. This is causing hardship which is quite inadequately realised.

Mr. Gaitskell: I must say to the hon. Member for Scarborough and Whitby (Mr. Spearman) that the problem has been most exhaustively examined in the past and I do not honestly think there is any practicable solution to it. If there were, we would certainly be ready to adopt it. The hon. Member knows the difficulties. It is quite impracticable to have an inventory of everything a trader has in his shop.
I would say to the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) that we included the articles to which he referred because they were invalids' requirements and we thought invalids deserved consideration.

Schedule, as amended, agreed to.

Sixth Schedule.—(TRANSITIONAL PROVISIONS IN CONNECTION WITH INCREASE IN RATE OF PROFITS TAX.)

Mr. G. P. Stevens: I beg to move, in page 50, line 8. at the end, to insert:
(c) where no dividend has been declared or paid by the body corporate, unincorporated society or other body, for a period of not less than two years before the tenth day of April, nineteen hundred and fifty-one, or where the body corporate, unincorporated society or other body, did not exist prior to the first day of January, nineteen hundred and fifty, any dividend declared by the holy corporate, unincorporated society or other body, not more than six months after the end of a chargeable accounting period ended prior to the tenth day of April, nineteen hundred and fifty-one, and assignable thereto shall be deemed to be a distribution in respect of that chargeable accounting period.

I seem to be the last of the Mohicans. Clause 24 of the Finance Bill provides that the rate of Profits Tax in respect of profits earned in any chargeable accounting period ending after 31st December, 1950, shall be at the rate of 50 per cent. instead of at the previous lower rate of 30 per cent. But paragraph 2 of the Sixth Schedule extends that principle considerably further. [Interruption.]

The Deputy-Chairman: Order. I cannot hear what is being said.

Mr. Stevens: It provides that if a dividend is declared which shows an increase as compared with the dividend declared in respect of the previous chargeable accounting period, the increase of the dividend from the previous lower rate to the higher rate shall be charged at 50 per cent. instead of 30 per cent., the rate attaching to the chargeable accounting period during which the profits were made. I am sorry if this is a bit complicated.
I wonder if the Chancellor has considered two categories of companies which are going to be severely hit by this Schedule. I refer in the first place to companies which did not exist prior to 1st January, 1950, and therefore could declare no dividend prior to that date, and also those companies which were only just within that period getting on to a profit earning and thus a dividend paying basis. I do not feel that it was the Chancellor's intention that any dividend, however modest, should be taxed at the higher rate. Obviously, where no dividend has been paid even 1, 2 or 5 per cent. does constitute an increase and, therefore, as it stands the 50 per cent. rate will apply. I hope the Chancellor will consider these special cases where no question of upsetting his policy applies in any shape or form and will accept this Amendment.

The Attorney-General: I am sorry to say we feel that this is a proposal we could not very well accept. I would begin, however, by saying that in the case of companies formed after 1st January, 1950, paragraph 2 of the Schedule would not operate in any case, because there would not have been time for there to have been a previous accounting period. The excess has to be taxed by reference to a comparison with a previous accounting period, and in the case of a company


only formed after 1st January, 1950, there would not have been time for there to have been two accounting periods to be compared with each other.
Where one has the case of a company formed earlier than that which has not in fact paid dividend, we feel the proposal is not a reasonable one because, after all, paragraph 2 only applies in the case of dividends declared after Budget day. If the hon. Member for Langstone (Mr. Stevens) will be so good as to refer to my right hon. Friend's Budget statement, he will see that there is a very clear indication in that statement as to what the position will be with regard to dividends declared after Budget day. It is clearly intimated by my right hon. Friend that the same scheme which had obtained on the occasion of the previous increase in Profits Tax was to be reproduced. In other words, a charge would fall on dividends declared in excess of a previous period after Budget day.
In those circumstances, those companies that declared dividends after Budget day did so in the full knowledge of the tax consequence which must ensue if a dividend is declared in excess of that in what is described as the previous chargeable accounting period. We feel, therefore, that there is no case for asking for what is a special tax exemption when they knew perfectly well the tax consequence would be an increased Profits Tax falling upon dividends declared after Budget day.

Mr. Stevens: I do not accept the explanation in any way at all, but owing to the lateness of the hour, and for no other reason, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule agreed to.

Seventh Schedule agreed to.

Bill reported, with Amendments.

As amended, to be considered upon Monday next, and to be printed. [Bill 122.]

FARM WORKERS (MEAT RATION)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Royle.]

3.43 a.m.

Mr. Baldwin: I feel extremely sorry that I feel compelled to keep the over-worked staff of the House going for a further half-hour. But I have been balloting for the Adjournment for something like three months and do not feel that I can give up the opportunity of bringing forward something which is of extreme importance to at least a certain section of the community. I refer to farm workers. My purpose is to ask the Ministry of Food to recognise the claims of the farm workers to at least as good a meat ration as that accorded to the miners.
There is an old saying, "Third time lucky." As this happens to be the third time in the last four years on which I have raised the question of rations for farm workers, I hope that now we have a fresh Minister and Parliamentary Secretary at the Ministry of Food I shall have more than lip service by way of sympathy.
These men have an extremely hard job to do in all sorts of weather. They have never staged a strike, or threatened one, during the 12 years they have been providing food for the nation under these conditions, and I ask hon. Gentlemen to imagine what these men have to go through when all the meat ration they get can be consumed at one meal on Sunday, and for the rest of the week they have to put up with the extra seasonal rations in the way of cheese, tea, sugar and so on.
The first adjournment Motion I had was in April, 1947, and I hope the Parliamentary Secretary, if he looks up these previous debates, will not trot out the old excuses why the farm workers' claims should not be recognised. I do not want to hear, for instance, of the extra cheese they get. I wonder if hon. Gentlemen would like to work day after day at all hours and in all weathers and have just bread and cheese for their meals—and cheese which one of my men describes as horrible stuff. I quite agreed with one of my men who said to me last week that he used to be very fond of a meal of bread and cheese, but the stuff he got now was so horrible that he disliked it intensely. He puts the wretched stuff in his mouth and just


manages to get it down his throat, and anyone who has eaten this synthetic stuff will appreciate that man's feelings.
Another suggestion was that farmers should set up canteens for which meat would be made available. I feel sure the Parliamentary Secretary will have a better idea than his predecessors of the impracticability of a farmer running a canteen. How is it possible for a farmer employing one or two men to run a canteen? It is quite impossible, and if anyone thinks that it is possible then let them try it out in the sparsely populated areas.
Another argument that was put up was that the extra meat would not be available. It seems rather extraordinary to me that in the same breath the Minister of those days was saying that if canteens were run meat would be available. Therefore, the argument that meat was not available for direct supply will not hold water. Another point was that the men in the country had an opportunity of keeping pigs and poultry. Some of them have, but a great proportion of them live in villages and council houses and are not allowed to do so.
Another excuse was that farmers had the right to kill a calf every three months. That is not a very practical suggestion if a farmer employs a couple of men unless, like the black man, they kill the animal and lie down beside it for a day or two and consume it. I suppose the men would have a jolly time for a couple of days, but they would then have to starve for the rest of the time. In any case we do not have cold storage on every farm.
The next debate was in January, 1948, when we again had the same old arguments, and the right hon. Lady who is now the Minister of National Insurance claimed that the nourishment from cheese was equal to that of meat. I wish she would come and try that one on the farmworkers. I know we can get sufficient calories from boiled potatoes, but they are not a very good way of building up strength to do heavy work.
The Parliamentary Secretary then said that on these matters they took the advice of the T.U.C. I hope that the Minister is not going to do so on this occasion, because what I want to say to the farm workers is that they should belong to their

union but not allow it to be affiliated to the T.U.C.; nor should they allow the union to be affiliated to any political party. The strength of the unions is to be completely independent of whatever political party is in power, and then they can negotiate from strength.
I am glad to see the hon. Member for Norfolk, North (Mr. Gooch), is present. In the first debate when this question was raised he did give me mild support. In the next he was not even present, but astonishingly enough the Member for Norfolk, South-West (Mr. Dye), defended the Minister. He said that he had not had half a dozen complaints from his constituency, that the only complaints he had were that 20 per cent. of farmers were not drawing the extra seasonal rations that farm workers were entitled to. When a farm worker's job is not seasonal I have never been able to understand. He also said the British Restaurants rural meals scheme was sufficient. I wonder if he still thinks so. I warned him that I was going to mention this, but I see he is not present. Perhaps he did not want to defend the Minister, and so got away.
Another excuse given by the T.U.C. is that they cannot have differential rationing. That is all humbug. It goes on at present in mining villages, where miners' wives and farm workers' wives are in the same queues at the butchers' shop, one drawing three times as much meat as the other. There is no complaint from the farm workers' wives. They say to the miners' wives, "Good luck to you, you are entitled to it, but we think we are also entitled to it." Miners also have facilities at canteens, they live where there are fish and chip shops, and probably fresh fish shops too. There are none of these facilities in the isolated districts where farm workers live.

Mr. Percy Wells: There are travelling fish shops in the villages.

Mr. Baldwin: It is nonsense for the hon. Member to talk like that. There is not a single travelling fish shop in the area round my farm, or the chance for the farm workers to get to a fish and chip shop or a fresh fish shop. Go into the hills of Wales or Scotland and see how many travelling fish shops there are.
These farm workers are doing a grand job of work. They work in all weathers, seven days a week, and sometimes through


the night too. It is time the country recognised their claims. They would have got their claim accepted at once if they had been made of the kind of stuff that threatens or stages a strike. It is sad to think that the workers still have to stage a strike to get anything. If farm workers had been in a position to threaten to down tools their claim would have been recognised at once.
I do not know whether the Minister has worked out how much additional meat would be necessary to give the men a double ration at the present time, but I think it would take something like 3,000 or 4,000 tons a year. It may be said that that extra meat is not available. If that is said, then I would ask the Minister, where did the meat come from for the 7,000 new establishments that were licensed last year? If there is meat available for those 7,000 new establishments, it would appear that there must be meat available to give the farm workers this ration which we are asking for them.
In a booklet entitled "Our Food Today," the Ministry of Food paints a rosy picture of a chain of restaurants set up to ensure that the workers should have access to canteens and be able to get at least one nourishing meal a day at a reasonable price. I do not know where that chain of restaurants is. There must be a link missing in the chain in my district. I have never seen that chain.
There is another interesting point on the possibility of the argument that the meat is not available. I had sent to me from Canada the other day a cutting of an advertisement by a firm that has food parcels available to be sent by Canadians to their friends in Great Britain. The astonishing thing is that the food parcels, which mainly consist of tinned meat, are processed in Liverpool.
If meat is available to process and tin for Canadians to buy, and then to send to their friends in Britain. it would appear to me that that meat should be made available to give an extra ration of meat to our farm-workers. Appropriately enough, the firm putting up these parcels is named "Unger" without the "H." The food parcels are: two tins of braised steak; one tin of beef steak and kidney; one beef steak and kidney pie; one tin of meat balls; one tin of shepherds' pie. It all sounds very nice to me. If that meat

is available it should be made available for our farm workers in extra rations.
I want to take up the claim that rationing means fair shares for all. It is absolute moonshine to say it gives fair shares for all. Look at the workers in the towns. Sedentary workers sitting at desks all the week can go to get two meat meals a day if they like to pay for them. How can that be called fair shares for all? The farm workers get less meat a week now than they ever have had during the whole time I have been connected with farming—and that is a long time. My man said to me, "In the old days, bad as they were, we did have a chance of getting two or three meat meals a week. Now my missus and I get through our little bit of meat on a Sunday."
I hope the Minister has come down to the House tonight in a conciliatory mood, and that he will recognise this claim of the agricultural workers, which has been made for a long time. The agricultural Press is now beginning to take up this claim, and I warn the Minister that now the claim will not die away as it has in the past. I hope that the Press and the Farmers' Union will make their weight felt. I believe they will, and that they will compel attention to what is nothing less than a standing disgrace to the people of this country.
The numbers of the workers in agriculture have declined in the last 12 months. There are two reasons; one is the shortage of cottages, and the other is the conditions in which the farm workers have to live. If we are not careful the numbers will be still further reduced, and we shall get smaller production in the agricultural world. Up to this year we have been able to call on hostels for workers. Now in the country we are feeling the shortage of labour. We shall not increase the labour nor keep the labour we have unless the farm workers are fed properly. I hope the Minister will recognise that fact and not raise any difficulties but meet the claim we are making.

4.0 a.m.

Mr. Gooch: I want to compliment hon. Members on the other side on their new-found zeal for the farm workers. It is in striking contrast to the years between the two wars, when there was little meat for farm workers and little of anything else, and in place of that low wages and a good deal of un-


employment. Thanks to their union and the Labour Government all this has been changed and the standard of living of the average farm worker today is much higher than ever it was in the days when the hon. Gentleman's party were in power. What was then a luxury in the farm worker's home is today a commonplace.
When a number of hon. Members on the other side put a Motion on the Order Paper asking for higher meat allowances for farm workers, I had the audacity to describe it as vote-catching. I have not changed my opinion. It did not occur to Conservative Members to ask for more meat when the meat was available, but they ask for it today when they know very well that there is a general dearth of meat.

Mr. Baldwin: I asked for this four years ago.

Mr. Gooch: I deprecate the movement in which the hon. Member has joined, to try and drive a wedge between the farm workers and the miners. We are told the miners get an extra ration of meat and at the same time that, but for the heartless action of the T.U.C., the farm workers would be getting more. It is a well-known fact that the Committee which advises the Ministry of Food on questions of rationing were not consulted about the extra meat ration that was given to the miners. It was a direct arrangement between the Government and the National Mineworkers' Union. May I add that it was the first and last arrangement of that kind.
The attitude of the T.U.C. on this question has been consistent throughout. They are not in favour of differential rationing for particular types of workers. Hon. Members should realise that both the National Union of Agricultural Workers and the National Farmers' Union have had this matter of rationing under constant review. Further concessions were made to farm workers in April of this year. The National Union of Agricultural Workers have a representative on the committee dealing with this matter, and thus we know all the moves.
So far as the National Farmers' Union are concerned. I can quote from a circular which has been sent to their county branches, not a long while ago, dealing with this very point. I think I ought to give it to the House, to let hon. Mem-

bers know that members of the Union have a point of view slightly at variance with the view expressed by the hon. Gentleman opposite.
It says, firstly, that the T.U.C. will not be party to a differential meat ration for farm workers; secondly, that in reaching a decision the labour sub-committee were bound to take into account the national meat shortage and that the Ministry of Food found it barely possible to meet the standard ration out of what they were receiving; and thirdly, and this is the most important, that it appears that the extra meat ration could only be granted to agricultural workers at the expense of other sections of the community, and the Committee felt that, as a responsible organisation, the Union ought not to put forward a proposition in the interest of their own workers which would have this sort of effect on others.
I might say to the Parliamentary Secretary that farm workers are amongst many workers who would like an extra ration of meat. If the Ministry of Food get a windfall in this direction, I know that he will not forget the farm workers of this country.

4.5 a.m.

The Parliamentary Secretary to the Ministry of Food (Mr. Frederick Willey): The bon. Member for Leominster (Mr. Baldwin) said that the agricultural workers had done a grand job. We recognise that. They were trying to do a grand job in 1939, but in 1939 they were getting a wage of 34s. 9d. a week for up to a 54-hour week. Today they are getting 100s. a week for a 47-hour week. The first thing the Government have done has been to recognise that the agricultural workers are doing a grand job for the country. This is what we have done, recognising the difficulties of agricultural workers about food.
We have provided the special allowance of 12 ounces a week of cheese. Secondly they have a seasonal allowance, which this year will cover a substantial part of the year. We brought these allowances in in April, covering all farm workers. These are not insubstantial allowances—2 ounces a week of tea, 6 ounces of sugar, 6 ounces of margarine, 3 ounces of cheese and 3 ounces of bacon a week for each agricultural worker. Apart from that, we are doing what we can through the rural meals scheme, by which


1,660,000 packed meals are being distributed in,rural areas each week.
The hon. Gentleman said one could not expect the farmers to run canteens. But we would recognise any suitable premises for the distribution of previously prepared meals, and if canteens are established they will be eligible for food on the full scale for heavy workers. We are endeavouring to do what we can for the farm worker, recognising that he has not the same canteen facilities as the other heavy workers. The hon. Gentleman says that that is not enough. I do not know for whom he is speaking. He is not speaking for the agricultural workers or the farmers. As my hon. Friend has pointed out, if we are in a democracy we should pay due regard to the responsible spokesmen of the industry.
The Trades Union Congress, speaking for the workers generally, has said that they would not recommend the introduction of differential rationing. In any case, if we are going to argue for differential rationing, who else is to be included? I represent a constituency that has a large number of shipyard workers, and if we are to have differential rationing they would have a legitimate claim. I have already dealt with the compensatory provisions for the farm workers, and T cannot go beyond that.
If we do introduce differential rationing we are. I think, bound to recognise—and this is recognised by the Trades Union Congress, which speaks for all workers that—there will be many workers who feel that they have a real grievance. But, supposing we did ignore the people best able to speak for those affected, where are we going to get the meat? It has to come out of the supplies available for rationing.

Mr. Baldwin: Mr. Baldwin rose—

Mr. Willey: Is the hon. Member going to suggest that we take it away from children under five years of age?

Mr. Baldwin: How is the Ministry going to get it for canteens?

Mr. Willey: It is a substantial amount of meat. Is the hon. Member going to take it from children under five years of age, who at present get only a half ration? Is he going to take it from adoles-

cents, who are growing? Is he going to take it from old age pensioners? The hon. Member has been here time after time when all this has been explained. Is he going to suggest that we should take it away from the housewives, from women doing two jobs—15 million people all told? If he is not going to suggest this, from whom does he suggest it should come?

Mr. Baldwin: From the restaurants in London.

Mr. Willey: Then one comes up against the difficulty which I mentioned in the second place. The hon. Member suggests that we should take meat from other people to provide for differential meat rationing. That would cause other workers to feel a grievance. These are difficulties which we have to face. They are difficulties which have been discussed. After all, the hon. Member does not contain within himself all the wisdom of the farming community. This has been discussed with the National Farmers' Union, the Agricultural Workers' Union, with other unions catering for agricultural workers, and with the Trades Union Congress.
We would wish, if we could, to do more for the agricultural worker, but I think we are driven to the conclusion that there are disadvantages which would outweigh the advantages, that in fact we would not be wise in introducing differential rationing, and that the best course for us to pursue is to consider whether there is any other way in which we can assist the agricultural worker, having regard to his lack of canteen facilities. We have examined this matter and have done all we can; but if there is any further step which might be taken we will be willing to discuss it. We have the machinery for proper discussion. We have the T.U.C., which is willing to advise us. The responsibility remains ours. I think that the right course is for us to continue to take advantage of the proper channels for discussion.

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Thirteen Minutes past Four o'Clock a.m., 20th June.